Although geography has been considered an important factor in international trade, spatial heterogeneity has not been fully investigated instandard gravity models. This paper contributes to the literature by investigating how gravity works geographically in trade. The geographicallyweighted regression (GWR) reveals spatial variations in estimated parameters. GWR regression results suggest even though physical distance isthe same, economic distance can be different based on the location. Ourregression results on the impact of Kyoto protocol show that while a lossof competitiveness is observed among non-European developed countries, no loss of competitiveness is clearly seen in the European Union.
Jun-Hyung Ko,Akeyoshi Matsuzaki &Dongwoo Yoo
