Lankhuizen, M., de Graaff, T. and de Groot, H.L.F. (2015). Product Heterogeneity, Intangible Barriers and Distance Decay: The effect of multiple dimensions of distance on trade across different product categories Spatial Economic Analysis, 10(2):137--159.
-
Affiliated authors
-
Publication year2015
-
JournalSpatial Economic Analysis
Abstract: We empirically examine 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 three-digit Standard International Trade Classification 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. We find that institutional distance, belonging to the same trade bloc and especially geographical distance are crucial and distinct factors for classifying commodities into homogeneous product groups.