Traditional literature takes gravity variables, regional economic agreement formation, and economy similarity as exogenous variables when discussing the determinants of the bilateral trade flows. This research uses the bilateral trade information from 1986 to 2008 and the common types of trade...

In this paper we explore the effect of protection lobbying by solving a firm's dynamic optimisation problem where there is uncertainty about future demand, the success of lobbying and non-zero entry/exit costs. We find out that the firms in declining industries tend to lobbying in economic...

This paper compares various specifications of the gravity model of trade as nested versions of a general specification that uses bilateral country-pair fixed effects to control for heterogeneity. For each specification, we show that the a theoretical restrictions to obtain them from the general...

The objective of this paper is to examine the effects of political asymmetries on a FTA and a CU. I have shown that either a higher lobbying sensitivity to the foreign firm or a more susceptibility of politicians to lobbying are sufficient to lead to a higher tariff protection at the individual...

This paper argues that it is necessary to allow for country-pair heterogeneity when using the gravity model to estimate international trade flows. We propose and estimate a fixed-effects model that eliminates the heterogeneity bias inherent in standard methods. Further, we show that there is no...