when the proportions of zeros is very large. The latter argument assumes that the number of trading firms can be generated via a count data model, with zero trade flows in the data reflecting the probability that no firms engage in trade. This idea was formalized further by Eaton, Kortum, and Sotelo (2012), who advocated for using the bilateral expenditure share as the dependent variable in place of the level of bilateral trade flows. In applied work, the gravity model is often extended by including variables to account for language relationships, tariffs, contiguity, access to sea, colonial history, and exchange rate regimes. Yet the estimation of structural gravity, based on Anderson and van Wincoop (2003), requires the inclusion of importer and exporter fixed effects, thus limiting the gravity analysis to bilateral trade costs (Baldwin and Taglioni 2007). Aside from OLS and PPML, other methods for gravity estimation include Gamma Pseudo-maximum Likelihood and the "tetrads" method of Head, Mayer, and Ries (2010). The latter involves first transforming the dependent variable in order to cancel out any country-specific factors. This provides another way of focusing only on bilateral trade costs. See also Gravity model of migration Internationalization Radiation law for human mobility Notes References Deardorff, Alan V. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?" In The Regionalization of the World Economy, edited by J.A. Frankel. Chicago: University of Chicago Press. 1998, 21. Frankel, Jeffery A. Regional Trading Blocs: In the World Economic System. Washington, DC: Institute of International Economics. October 1997. "Gravity Equations: Workhorse, Toolkit, Cookbook" (Keith Head and Thierry Mayer), Elsevier's Handbook of International Economics Vol. 4 McPherson,M. A., M. R. Redfearn and M. A. Tieslau. "A Re-examination of the Linder Hypothesis: a Random-Effects Tobit Approach." Working Paper from the website of the Department of Economics; University of North Texas. External links Information Gravity Portal at the United States International Trade Commission World Bank presentation on the gravity model Global multi-market simulation using World Bank's World Integrated Trade Solution *Global Tariff Cuts and Trade Simulator A page on the implementation of the Poisson pseudo-maximum likelihood estimator Data World Bank's Trade and Production Database Resources for data on trade, including the gravity model UNESCAP dataset for gravity model International trade theory Econometric models Mathematical economics