Heterogeneity and the distance puzzle - Archive ouverte HAL
Pré-Publication, Document De Travail Année : 2017

Heterogeneity and the distance puzzle

Résumé

This paper shows that reduced heterogeneity of exporter-specific goods can provide a direct explanation of the distance puzzle. Using COMTRADE 4-digit bilateral trade data we find that the elasticity of trade to distance has increased by 8% from 1962 to 2009. Theoretical foundations of the gravity equation indicate that the distance coefficient is the product of the elasticity of trade costs to distance and a measure of heterogeneity, e.g. the substitution elasticity between exporter-specific goods in the Armington framework. This parameter has increased by 13% from 1962 to 2009. The evolution of the distance coefficient is thus compatible with a 4% reduction in the elasticity of trade costs to distance.
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Dates et versions

hal-01496258 , version 1 (27-03-2017)

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  • HAL Id : hal-01496258 , version 1

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Elizaveta Archanskaia, Guillaume Daudin. Heterogeneity and the distance puzzle. 2017. ⟨hal-01496258⟩
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