Arbeitspapier
The gravity equation with micro-founded trade costs
Gravity Equations are broadly used to estimate the impacts of trade impediments on trade flows. It is often stated that results are implausibly high. In theoretical foundations of the gravity equation, trade costs usually enter as icebergmelting-costs. This paper offers an alternative approach to model trade costs. From a microeconomic point of view, trade costs should depend on trade input prices and - which is new - the underlying trade volume. If trade costs are determined by the trade volume, and average trade costs are falling with the trade volume (e.g. due to economies of scale in the trade sector), empirical results from gravity equations are likely to be biased.
- Sprache
-
Englisch
- Erschienen in
-
Series: Dresden Discussion Paper Series in Economics ; No. 11/09
- Klassifikation
-
Wirtschaft
Trade: General
Model Construction and Estimation
- Thema
-
gravity equation
trade costs
estimation bias
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Rudolph, Stephan
- Ereignis
-
Veröffentlichung
- (wer)
-
Technische Universität Dresden, Fakultät Wirtschaftswissenschaften
- (wo)
-
Dresden
- (wann)
-
2009
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:44 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Rudolph, Stephan
- Technische Universität Dresden, Fakultät Wirtschaftswissenschaften
Entstanden
- 2009
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