Since its first introduction, the gravity model is characterized by both a long history of applications across disciplines and by high empirical relevance. A similar effect can be observed in economics: the economic mass of both the domestic and the partner country attract trade while this effect is restrained by the distance between the potential trading partners. The idea of trade gravity is borrowed from a basic principle of physics, where the mass of an object causes a force of attraction which diminishes with increasing distance this force is called gravity. Third, with increasing processing level, determinants of forest product trade seem to be influenced by different factors. Second, the appearance of wood market trade is not always influenced by the same factors as the quantity traded. Three major results were found: first, the traditional gravity approach overestimates the impact of the overall income on forest sector trade. This is done via linear and non-linear estimation methods for the forest sector on the whole and for thirteen forest products in detail. Consequently, the present study aims to close this research gap and reveal influencing factors for the appearance and the intensity of forest product trade by applying the structural gravity approach. However, this traditional approach is not able to explain all aspects of trade at a disaggregated sector level. ![]() Despite the long history of the gravity model and its high, universal explanatory potential, its application for the forest sector is not broad and refers only to the traditional definition of the gravity approach. ![]() In its basic form, the model assumes that income and distance between two partners most likely play a major role in the occurrence of trade. The gravity model of trade is one of the most common approaches in modern econometrics.
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