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To estimate correctly the effect of variable trade costs on firms’ exports, the gravity equation should control for the number of firms that participate in foreign markets. Due to the absence of these data, previous studies control for this omitted variable using econometric strategies that...
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's exports and the distance to destination countries for Germany. To anticipate the most important result, it is shown that the … quality of exported goods and the distance to destination countries are not statistically positively correlated. …
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