Trade in MIRAGE-VA consists of two different Armington-like demand trees: final goods and intermediate goods. The separation between final and intermediate goods is done using the BEC classification, and allows to differentiate between end use:

Trade costs

Trade costs are of three different types in MIRAGE-e:

  1. Tariffs
  2. Purchasing of international transportation services
  3. Non-tariff measures

Any trade cost is differentiated by end use (final versus intermediate consumption).

International transportation services

See The Transport Sector.

Non-tariff measures


MIRAGE-e only uses information on the trade-restrictiveness of NTMs (no benefit is considered), using ad-valorem equivalents from:

  • Fontagné, Mitaritonna, and Signoret (2016) in Services sectors
  • Kee, Nicita, and Olarreaga (2008) in Goods.

NTMs within the EU

It is hard to quantify what are the differences in treatment between flows within the EU and flows crossing the EU single market border. So far, we rely on different estimates:

  • In goods: We use estimates of the EU frontier effect from Aussilloux et al. (2011)
  • In services: We use estimates from Berden et al. (2009) that evaluated the share of NTMs that were “actionable” (i.e. likely to be reduced if there exists a political will) in the case of an EU-US trade agreement. We assume that all actionable measures are absent between EU countries.

This reduction in trade costs between EU member states is implemented at the time of calibration.


Non-tariff measures (NTMs) can either be modeled as:

  • an iceberg trade cost
  • an export-tax equivalent (rent-generating)
  • an import-tax equivalent (rent-generating)
  • any split between the three alternatives

By default, without specific knowledge about the best modeling assumptions, NTMs are assumed to be 1/3 iceberg, 1/3 export-tax equivalent, and 1/3 import-tax equivalent.

In every region, the rents created by import-tax equivalent NTMs on imports and export-tax equivalents on exports are allocated to the representative household by a lump-sum transfer.

Implementation through “generalized” costs

The different trade costs remain separated but are aggregated using “generalized” tariffs (\(GnTariff_{i,r,s,t}^C\) and \(GnTariff_{i,r,s,t}^{IC}\)), export taxes (\(GnTaxEXP_{i,r,s,t}^{C}\) and \(GnTaxEXP_{i,r,s,t}^{IC}\)) and iceberg trade costs (\(GnTC_{i,r,s,t}^{C}\) and \(GnTC_{i,r,s,t}^{IC}\)). With the example of final goods :

  • \(GnTC_{i,r,s,t}^C = 1 + tCost_{i,r,s,t} + shareNTM_{i,r,s}^{tCost}\left(taxSER_{i,r,s,t}^C + NTM_{i,r,s,t}^C\right)\)
  • \(GnTariff_{i,r,s,t}^C = Tariff_{i,r,s,t}^C + shareNTM_{i,r,s}^{Tariff} NTM_{i,r,s,t}^C\)
  • \(GnTaxEXP_{i,r,s,t}^C = taxEXP_{i,r,s,t}^C + taxMFA_{i,r,s,t}^C + shareNTM_{i,r,s}^{taxEXP} NTM_{i,r,s,t}^C\)

Any trade policy scenario has, therefore to be implemented directly on \(Tariff_{i,r,s,t}^C\), \(tCost_{i,r,s,t}\), \(NTM_{i,r,s,t}^C\), \(taxSER_{i,r,s,t}^C\) and \(taxEXP_{i,r,s,t}^C\)


Aussilloux, Vincent, Charlotte Emlinger, Lionel Fontagné, and Houssein Guimbard. 2011. “The Economic Consequences for the UK and the EU of Completing the Single Market.” Economics Paper 11. BIS.
Berden, Koen G, Joseph Francois, Saara Tamminen, Martin Thelle, and Paul Wymenga. 2009. “Non-Tariff Measures in EU–US Trade and Investment an Economic Analysis.” Rotterdam, ECORYS Nederland BV.
Fontagné, Lionel, Cristina Mitaritonna, and José E. Signoret. 2016. “Estimated Tariff Equivalents of Services NTMs.” Working Paper 2016-20. CEPII.
Kee, Hiau Looi, Alessandro Nicita, and Marcelo Olarreaga. 2008. “Estimating Trade Restrictiveness Indices.” The Economic Journal 119 (534): 172–99.