Extended Gravity

Eduardo Morales, Gloria Sheu, Andrés Zahler

Research output: Contribution to journalArticlepeer-review

60 Scopus citations


Exporting firms often enter foreign markets that are similar to their previous export destinations. We develop a dynamic model in which a firm's exports in a market may depend on how similar the market is to the firm's home country (gravity) and to its previous export destinations (extended gravity). Given the large number of export paths from which forward-looking firms may choose, we use a moment inequality approach to estimate our model. Our estimates indicate that sharing similarities with a prior export destination in terms of geographic location, language, and income per capita jointly reduces the cost of foreign market entry by 69-90%. Reductions due to geographic location (25-38%) and language (29-36%) have the largest effect. Extended gravity thus has a large impact on export entry costs.

Original languageEnglish (US)
Pages (from-to)2668-2712
Number of pages45
JournalReview of Economic Studies
Issue number6
StatePublished - Nov 1 2019

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics


  • Export dynamics
  • Extended gravity
  • F10
  • Gravity
  • L65
  • Moment inequalities


Dive into the research topics of 'Extended Gravity'. Together they form a unique fingerprint.

Cite this