EconPapers    
Economics at your fingertips  
 

The Gravity Equation in International Trade: an Explanation

Thomas Chaney

SciencePo Working papers Main from HAL

Abstract: The gravity equation in international trade states bilateral exports are proportional to economic size, and inversely proportional to geographic distance. While the role of size is well understood, that of distance remains mysterious. I offer an explanation for the role of distance: If (i) the distribution of firm sizes is Pareto, (ii) the average squared distance of a firm's exports is an increasing power function of its size, and (iii) a parameter restriction holds, then the distance elasticity of trade is constant for long distances. When the firm size distribution follows Zipf's law, trade is inversely proportional to distance.

Date: 2018-02
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03391935
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published in Journal of Political Economy, 2018, 126 (1), pp.150-177. ⟨10.1086/694292⟩

Downloads: (external link)
https://sciencespo.hal.science/hal-03391935/document (application/pdf)

Related works:
Working Paper: The Gravity Equation in International Trade: an Explanation (2018) Downloads
Working Paper: The Gravity Equation in International Trade: An Explanation (2013) Downloads
Working Paper: The Gravity Equation in International Trade: An Explanation (2013) Downloads
Working Paper: The Gravity Equation in International Trade: An Explanation (2013) Downloads
Working Paper: The Gravity Equation in International Trade: An Explanation (2013) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:spmain:hal-03391935

DOI: 10.1086/694292

Access Statistics for this paper

More papers in SciencePo Working papers Main from HAL
Bibliographic data for series maintained by Contact - Sciences Po Departement of Economics ().

 
Page updated 2025-03-19
Handle: RePEc:hal:spmain:hal-03391935