1 trade costs and intra industry jeffrey h bergstrand department of finance mendoza school business university notre dame in 46556 usa e mail nd edu peter egger economics innsbruck universitätsstrasse 15 a 6020 austria uibk ac at abstract formal economic modeling essentially began with krugman 1979 1980 1981 lancaster helpman 1987 is generally credited the first econometric test these theories subsequent notable contributions from hummels levinsohn 1995 debaere 2004 however all empirical models ignore transportation or more broadly yet as anderson van wincoop suggest are quite large this paper extends work by 1990 that addressed explicit presence context cum model we derive four empirically testable hypotheses regarding investigated using cross section bilateral oecd grubel lloyd indexes results strongly accordance indicating importance
