Comparative Advantage, the Rank-Size Rule, and Zipf's Law

Tinbergen Institute Discussion Paper No. 06-1001/1

39 Pages Posted: 9 Nov 2006

See all articles by Jeroen Hinloopen

Jeroen Hinloopen

CPB Netherlands Bureau of Economic Policy Analysis; University of Amsterdam - Amsterdam School of Economics (ASE); Tinbergen Institute

Charles van Marrewijk

Utrecht University - School of Economics

Date Written: November 2006

Abstract

Using a comprehensive international trade data set we investigate empirical regularities (known as Zipf's Law or the rank-size rule) for the distribution of the interaction between countries as measured by revealed comparative advantage. Using the recently developed estimator by Gabaix and Ibragimov (2006) we find strong evidence in favor of the rank-size rule along the time, country, and sector dimension for three different levels of data aggregation. The estimated power exponents that characterize the distribution of revealed comparative advantage are stable over time but differ between countries and sectors. These differences are related empirically to country and sector characteristics, including population size, GDP, and factor intensities.

Keywords: Revealed comparative advantage, Balassa index, rank-size rule, Zipf's Law, power law, Pareto distribution

JEL Classification: C13, C33, F1, L1, O5, R12

Suggested Citation

Hinloopen, Jeroen and van Marrewijk, Charles, Comparative Advantage, the Rank-Size Rule, and Zipf's Law (November 2006). Available at SSRN: https://ssrn.com/abstract=943370 or http://dx.doi.org/10.2139/ssrn.943370

Jeroen Hinloopen (Contact Author)

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

University of Amsterdam - Amsterdam School of Economics (ASE) ( email )

Roetersstraat 11
Amsterdam, North Holland 1018 WB
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Charles Van Marrewijk

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands
*31-(0)30-2539810 (Phone)

HOME PAGE: http://www.charlesvanmarrewijk.nl

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