What is meant by trade blocks inside of the CAPRI market model?
Due to the bi-lateral trade presentation, the number of variables and equation will increase quadratically with the number of regions. Therefore, the CAPRI market model has “clustered” the countries in some regions (e.g. the EU15 Member States) to trade blocks. The model only capture trade flows, transport costs, tariffs, export subsidies and import prices at the level of these trade blocks. However, a trade block may be broken down to individual countries with own behavioural equations.
