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Product Heterogeneity, Intangible Barriers and Distance Decay: The Effect of Multiple Dimensions of Distance on Trade across Different Product Categories

Maureen B.M. Lankhuizen (), Thomas Graaff () and Henri de Groot ()
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Maureen B.M. Lankhuizen: VU University Amsterdam

No 12-065/3, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This discussion paper resulted in a publication in 'Spatial Economic Analysis' . We empirically examine the heterogeneity in the effects of multiple dimensions of distance on trade across detailed product groups. Using finite mixture modeling on bilateral trade data at the 3-digit SITC level, we endogenously group product categories into an, a priori unknown, number of segments based on estimated coefficients of multiple dimensions of distance in the gravity equation. We find that institutional distance, whether countries belong to the same trade block and especially geographical distance are crucial and distinct factors to classify commodities in homogeneous groups.

Keywords: bilateral trade; gravity models; distance; institutions; product heterogeneity; finite mixture modeling (search for similar items in EconPapers)
JEL-codes: F14 F21 F23 (search for similar items in EconPapers)
Date: 2012-07-09
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Journal Article: Product Heterogeneity, Intangible Barriers and Distance Decay: The Effect of Multiple Dimensions of Distance on Trade across Different Product Categories (2015) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20120065

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