Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/40304
Authors: 
Kleinert, Jörn
Toubal, Farid
Year of Publication: 
2007
Series/Report no.: 
Tübinger Diskussionsbeitrag 313
Abstract: 
Gravity equations explaining foreign affiliates' sales are ad hoc and hence, estimated coeffcients are hard to interpret. We therefore provide the theoretical underpinnings of the gravity equation applied to the analysis of sales of foreign affiliates of multinational firms. We argue that the success of the gravity equation results from the fact that it can be derived from various theoretical models. We illustrate this point by deriving a gravity equation from three different models of multinational firms. Using data on real affiliate sales, we show how this derived gravity equation can nevertheless be used to discriminate between the different theoretical models. - gravity equation ; multinational firms ; heterogeneity
JEL: 
F23
F12
C21
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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