The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence

1985 ◽  
Vol 67 (3) ◽  
pp. 474 ◽  
Author(s):  
Jeffrey H. Bergstrand
Keyword(s):  
International Trade ◽  
Empirical Evidence ◽  
Gravity Equation ◽  
Microeconomic Foundations

Bilateral Treaties and The Most-Favored-Nation Clause: The Myth of Trade Liberalization in the Nineteenth Century

2008 ◽  
Vol 60 (2) ◽  
pp. 147-188 ◽  
Author(s):  
Olivier Accominotti ◽  
Marc Flandreau
Keyword(s):  
International Trade ◽  
Trade Liberalization ◽  
Empirical Evidence ◽  
Trade Agreement ◽  
Trade Agreements ◽  
Point Of View ◽  
Most Favored Nation ◽  
The World ◽  
Most Favored Nation Clause ◽  
Bilateral Treaties

Textbook accounts of the Anglo-French trade agreement of 1860 argue that it heralded the beginning of a liberal trading order. This alleged success holds much interest from a modern policy point of view, for it rested on bilateral negotiations and most-favored-nation clauses. With the help of new data on international trade (the RICardo database), the authors provide empirical evidence and find that the treaty and subsequent network of MFN trade agreements coincided with the end of a period of unilateral liberalization across the world. They also find that it did not contribute to expanding trade at all. This is contrary to a deeply rooted belief among economists, economic historians, and political scientists. The authors draw a number of policy lessons that run counter to the conventional wisdom and raise skepticism toward the ability of bilateralism and MFN arrangements to promote trade liberalization.

scholarly journals The Network Structure of International Trade

2014 ◽  
Vol 104 (11) ◽  
pp. 3600-3634 ◽  
Author(s):  
Thomas Chaney
Keyword(s):  
International Trade ◽  
Empirical Evidence ◽  
Geographic Distribution ◽  
Network Structure ◽  
Foreign Markets ◽  
International Network ◽  
Trading Partners ◽  
Novel Theory ◽  
Trade Frictions ◽  
Dynamic Formation

Motivated by empirical evidence I uncover on the dynamics of French firms' exports, I offer a novel theory of trade frictions. Firms export only into markets where they have a contact. They search directly for new trading partners, but also use their existing network of contacts to search remotely for new partners. I characterize the dynamic formation of an international network of exporters in this model. Structurally, I estimate this model on French data and confirm its predictions regarding the distribution of the number of foreign markets accessed by exporters and the geographic distribution of exports. (JEL D85, F11, F14, L24)

scholarly journals Geography, Trade, and Power-Law Phenomena

2020 ◽  
Author(s):  
Pao-Li Chang ◽  
Wen-Tai Hsu
Keyword(s):  
Empirical Evidence ◽  
Power Function ◽  
Power Law ◽  
Firm Size ◽  
Firm Heterogeneity ◽  
Power Laws ◽  
Tail Probability ◽  
Gravity Equation ◽  
Trade Flows ◽  
City Size

This article reviews interrelated power-law phenomena in geography and trade. Given the empirical evidence on the gravity equation in trade flows across countries and regions, its theoretical underpinnings are reviewed. The gravity equation amounts to saying that trade flows follow a power law in distance (or geographic barriers). It is concluded that in the environment with firm heterogeneity, the power law in firm size is the key condition for the gravity equation to arise. A distribution is said to follow a power law if its tail probability follows a power function in the distribution’s right tail. The second part of this article reviews the literature that provides the microfoundation for the power law in firm size and reviews how this power law (in firm size) may be related to the power laws in other distributions (in incomes, firm productivity and city size).

scholarly journals What explains the widening gap between the retail and producer prices of food?

2009 ◽  
Vol 18 (3-4) ◽  
pp. 317-331 ◽  
Author(s):  
T. KUOSMANEN ◽  
J. NIEMI
Keyword(s):  
International Trade ◽  
Empirical Evidence ◽  
Productivity Growth ◽  
Agricultural Policy ◽  
Imperfect Competition ◽  
Empirical Studies ◽  
Food Hygiene ◽  
Policy Reforms ◽  
The Usa ◽  
Producer Prices

The widening margin between the retail and producer prices of food has been documented in numerous empirical studies both in Europe and in the USA for many different food products. This paper explores the possible reasons for this phenomenon, with emphasis on the situation in Finland. Six conceivable explanations are recognized: 1) increased degree of processing, 2) better food hygiene, 3) differences in productivity growth across sectors, 4) agricultural policy reforms, 5) international trade, and 6) imperfect competition. In this paper each of the hypotheses is assessed in light of the available empirical evidence.

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