Structural gravity equations with intensive and extensive margins

Matthieu Daniel CROZET, Pamina KOENIG

Research output: Journal PublicationsJournal Article (refereed)

44 Citations (Scopus)

Abstract

Recent trade models with heterogeneous firms have changed the interpretation of gravity equations. Chaney (2008) shows that the effect of distance on the number of exporters and average exports depends on key parameters characterizing the elements of market structure. We use firm-level export data to estimate the structural parameters of Chaney's model. Controlling for the fixed costs of exporting, our estimated parameters match, for 28 out of 34 industries, the model's theoretical predictions. Our industry parameters allow us to evaluate separately the effect of transport costs and tariffs on trade, without having to resort to detailed data on trade frictions.
Original languageEnglish
Pages (from-to)41-62
Number of pages22
JournalCanadian Journal of Economics
Volume43
Issue number1
DOIs
Publication statusPublished - 1 Jan 2010
Externally publishedYes

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Bibliographical note

This article also published as Crozet, M., and Koenig, P. (2008). Structural gravity equations with intensive and extensive margins. CEPII Working Paper, (2008-30). France: CEPII. Retrieved from http://www.cepii.fr/PDF_PUB/wp/2008/wp2008-30.pdf

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