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Indiana University Bloomington


The Kelley Advantage

The department is home to the authors of Managerial Economics and Business Strategy and Games and Information: An Introduction to Game Theory, two of the nation’s leading textbooks in the field.

Research and Publications

Journal Articles

International Trade, OECD Membership, and Religion

2006, Open Economies Review

Michele U. Fratianni, Heejoon Kang


Transaction costs in trade gravity equation are proxied by the distance that separates two trading partners, under the assumption that the distance elasticity is the same across all trading partners. We show that distance elasticity, however, critically depends on whether trading partners are industrial countries (i.e., members of the OECD) or share same religion. These heterogeneities are both statistically and economically significant. For instance, expected trade flows are the largest when an OECD member trades with a non-member and both are non-religious. Expected trade flows fall as much as by 62.9% between two non-religious, non-OECD members. Expected bilateral trade drops by 48.1% when both countries in the pair are OECD members while one is Christian and the other is Islamic. Both religion and OECD membership significantly affect the typical transaction costs implied by the gravity equation.


Fratianni, Michele U., and Heejoon Kang (2006), "International Trade, OECD Membership, and Religion," Open Economies Review, Vol. 17 (4-5): 493-508.


gravity equation, OECD membership, religion, trade flows, transaction costs