Distance, Transaction Costs, and Preferences in European Trade

Ari Kokko, Patrik Gustavsson Tingvall

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    Beckerman (1956) and Linder (1961) have suggested that international trade is not determined by supply-side factors alone—perceptions about foreign countries and country preferences matter. We explore the relation between exports, cultural distance, and country preferences in Europe. The results show that several distance and preference-related variables, based on Hofstede’s cultural dimensions, income gaps, and voting patterns in the Eurovision Song Contest, are significantly related to bilateral trade. We conclude that cultural distance and preferences influence trade through several channels, both indirectly through transaction costs and more directly, as countries seem to prefer some trade partners before others.
    Original languageEnglish
    JournalInternational Trade Journal
    Issue number2
    Pages (from-to)87-120
    Publication statusPublished - 2014


    • International Trade
    • Psychic Distance
    • Country Preferences
    • Eurovision
    • Gravity model

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