Structural Gravity Equations with Intensive and Extensive Margins

Matthieu Crozet and Pamina Koenig

Working Papers from CEPII research center

Abstract: Recent trade models with heterogenous firms have considerable consequences on the interpretation of gravity equations. Chaney (2008) shows that the effect of distance on trade margins incorporates three parameters: the elasticity of substitution between goods, the elasticity of trade costs with respect to distance, and the degree of firm heterogeneity. We structurally estimate the parameters of trade flows in Chaney’s model using French firm-level export data for 1986-1992, and controlling for the fixed costs of exporting. Our estimated parameters are consistent, for 27 out of 34 industries, with the theoretical model. They also allow us to evaluate the effects of transport cost separately from the effects of tarifs, without having to resort to detailed data on trade frictions.

Keywords: Gravity equations; International trade; Firm heterogeneity (search for similar items in EconPapers)
JEL-codes: F12 (search for similar items in EconPapers)
Date: 2008-12
New Economics Papers: this item is included in nep-dev and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Related works:
Journal Article: Structural gravity equations with intensive and extensive margins (2010)
Journal Article: Structural gravity equations with intensive and extensive margins (2010)
Working Paper: Structural gravity equation with intensive and extensive margins (2010)
Working Paper: Structural gravity equation with intensive and extensive margins (2010)
Working Paper: Structural gravity equation with intensive and extensive margins (2010)
Working Paper: Structural gravity equations with intensive and extensive margins (2007)
Working Paper: Structural gravity equations with intensive and extensive margins (2007)
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