Bulkiness of goods and the gravity of international trade: Differential impact of trade barriers

This study investigates how the trade elasticity to trade barriers, or the lack thereof, varies with the bulkiness of goods, measured as the value-to-weight ratio (V/W ratio). The empirical analysis presented herein offers compelling evidence that lighter goods, characterized by higher V/W ratios, demonstrate reduced trade elasticity to distance, contiguity, and colonial relationships but heightened trade sensitivity to language. These findings emphasize the importance of accounting for the variations in V/W ratios when applying gravity models and reveal noteworthy heterogeneity in trade elasticity at the country and trade-pair levels.