Gravity Equation of Transaction Network from 800,000 Japanese Firms' Transaction Network Data
6 Pages Posted: 4 Nov 2008 Last revised: 10 Jul 2016
Date Written: November 2, 2008
Abstract
In International Economics, so-called gravity equation has been successful. In the present paper, we show that similar equation concerning transaction network holds well. The weight of transaction network among Japanese prefectures is explained by Sales-i*Sales-j/Distance-ij very well. The definitions of terms are as follows. Sales-i is the total sales of all the firms in prefecture-i. Distance-ij is the physical distance between prefecture i and j. Weight-ij is the number of transaction links between all the firms in prefecture-i and all the firms in prefecture-j. We also obtain power parameters of Sales and Distance. They are very close to 1 and -1. The estimated power parameters as well are in excellent agreement with the network gravity equation.
For this purpose we used Japanese firms' transaction network data which consists of 800,000 firms.
Keywords: Transaction Network, Gravity Equation, Geography, Network
JEL Classification: R3, R4, L14, L16
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Technology, Factor Supplies and International Specialization: Estimating the Neoclassical Model
-
Do Endowments Predict the Location of Production? Evidence from National and International Data
-
One Size Fits All? Heckscher-Ohlin Specialization in Global Production
-
The Heckscher-Ohlin-Vanek Model of Trade: Why Does it Fail? When Does it Work?
By Donald R. Davis, David E. Weinstein, ...
-
Increasing Returns and All that: A View from Trade
By Werner Antweiler and Daniel Trefler
-
Estimation of Cross-Country Differences in Industry Production Functions
-
Specialization and the Volume of Trade: Do the Data Obey the Laws?