Introduction

The gravity model describes one of the most stable relationships in economics: interaction between large economic clusters is stronger than between smaller ones, and nearby clusters attract each other more than far-off ones. This formulation of the model admittedly is vague. What is meant by large economic clusters, or “far-off”? In fact, this ambiguity reflects the success of the gravity model in economics. Although the model is probably best known in the context of international trade and capital flows between countries, it has also been successfully applied to describe how consumers flow between different shopping malls, patients between hospitals and much more. Also “distance” is a very broad concept. It might reflect actual distances in miles, as an approximation of transportation costs, but over the years more subtle elements of distance-related factors have been considered. Economic factors such as tariffs and non-tariff barriers have been included in applications of the gravity model, but also “non-economic” factors have been included, such as cultural differences, differences in religion, language (dis)similarities, the presence or absence of former colonial ties, institutional differences, differences in technological development, and so on.

The list of applications is long and, most remarkably, empirical tests show that this simple idea is very successful from an empirical point of view and is able to show that many economic phenomena between different locations can empirically be described by a gravity equation.