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A Gravity Model under Monopolistic Competition. CEPS ENEPRI Working Papers No. 33, 1 March 2005

Alho, Kari E.O. (2005) A Gravity Model under Monopolistic Competition. CEPS ENEPRI Working Papers No. 33, 1 March 2005. [Working Paper]

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    Abstract

    This paper presents an alternative derivation of the gravity equation for foreign trade, which is explicitly based on monopolistic competition in the export markets and which is more general than previously seen in the literature. In contrast with the usual specification, our model allows for the realistic assumption of asymmetry in mutual trade flows. The model is estimated for trade in Europe, producing evidence that trade flows and barriers do indeed reveal strong asymmetry. We then carry out a simulation, based on the estimated model, of the general equilibrium effects (through trade) of the UK’s possible entrance into the economic and monetary union.

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    Item Type: Working Paper
    Subjects for non-EU documents: Countries > U.K.
    EU policies and themes > External relations > international trade
    EU policies and themes > Policies & related activities > economic and financial affairs > EMU/EMS/euro
    Subjects for EU documents: UNSPECIFIED
    EU Series: UNSPECIFIED
    ["eprint_fieldname_eusries" not defined]: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Centre for European Policy Studies (Brussels) > ENEPRI Working Papers
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 31 Mar 2007
    Page Range: p. 14
    Last Modified: 15 Feb 2011 17:44
    URI: http://aei.pitt.edu/id/eprint/6737

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