Week 1: Introduction Flashcards
1
Q
Explain the gravity model
A
2
Q
What are trade costs
A
- Also known as trade barriers
- These are factors that lead to the gravity model not working
3
Q
3 types of trade costs
A
- Geographical (distance, land locked with bad neighbors)
- Historical (Cultural differences)
- Political (tariffs)
4
Q
What does economic distance take into account?
A
- Economic distance takes into account geographical distance and other factors such as politics.
