Structural Gravity Equations with Intensive and Extensive Margins

22 Pages Posted: 20 Jan 2010

See all articles by Matthieu Crozet

Matthieu Crozet

Université Paris I Panthéon-Sorbonne - TEAM

Pamina Koenig

University of Rouen; Paris School of Economics (PSE)

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.

Suggested Citation

Crozet, Matthieu and Koenig, Pamina, Structural Gravity Equations with Intensive and Extensive Margins. Canadian Journal of Economics/Revue canadienne d'économique, Vol. 43, Issue 1, pp. 41-62, February / fevrier 2010. Available at SSRN: https://ssrn.com/abstract=1539177 or http://dx.doi.org/10.1111/j.1540-5982.2009.01563.x

Matthieu Crozet (Contact Author)

Université Paris I Panthéon-Sorbonne - TEAM ( email )

106-112 boulevard de l'hôpital
Cedex 13 Paris, P75647
France
+33 1 4407 8267 (Phone)
+33 1 4407 8267 (Fax)

Pamina Koenig

University of Rouen ( email )

1, rue Thomas Becket
Mont Saint Aignan Cedex
Rouen, 76821
France

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

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