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Heterogeneity In Trade Costs

Author

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  • Michele Fratianni

    (Indiana University, Kelley School of Business)

  • Francesco Marchionne

    (Università Politecnica delle Marche)

Abstract

In this paper, we test the hypothesis that higher economic development is associated with lower trade costs. Using exports from 103 Italian provinces to 188 countries over the period 1995-2004, we estimate distance elasticity, our measure of trade costs, through a gravity equation model of bilateral trade derived by Anderson and van Wincoop (2003). We use different methods to control for multilateral resistance. Results corroborate our hypothesis. We find that heterogeneity of trade costs in Italian provinces is high and that it is negatively associated with economic development.

Suggested Citation

  • Michele Fratianni & Francesco Marchionne, 2008. "Heterogeneity In Trade Costs," Economics Bulletin, AccessEcon, vol. 6(48), pages 1-14.
    • Handle: RePEc:ebl:ecbull:eb-08f10028
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    References listed on IDEAS

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    Cited by:

    1. Michele Fratianni & Francesco Marchionne, 2012. "Trade Costs and Economic Development," Economic Geography, Clark University, vol. 88(2), pages 137-163, April.

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    More about this item

    Keywords

    trade costs;

    JEL classification:

    • F1 - International Economics - - Trade
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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