Krugman on Gravity and Trade

that the volume of trade between Kanesh and various trading partners seems to fit a gravity equation: trade between any two regional economies is roughly proportional to the product of their GDPs and inversely related to distance. Neat.

But what does the seemingly universal applicability of the gravity equation tell us?

It’s the law!

(via Gravity)

Krugman on trade is always worth a read.