Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/120493
Authors: 
Lankhuizen, Maureen
de Graaff, Thomas
De Groot, Henri
Year of Publication: 
2012
Series/Report no.: 
52nd Congress of the European Regional Science Association: "Regions in Motion - Breaking the Path", 21-25 August 2012, Bratislava, Slovakia
Abstract: 
This paper empirically examines the heterogeneity in the effects of multiple dimensions of distance on trade across detailed product groups. Using finite mixture modelling 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. The paper contributes to the literature by offering a new classification of products into homogeneous groups. We find that distance decay functions in a gravity model of international trade at a disaggregate level reveal a complex process that involve location characteristics (comparative and natural advantages, demand patterns or preferences) as well as intrinsic sensitivity of trade to multiple dimensions of distance.
Subjects: 
bilateral trade
gravity models
cultural distance
institutions
product heterogeneity
finite mixture modelling
JEL: 
F14
F21
F23
Document Type: 
Conference Paper

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