Roberto Duran Fernandez
Transport Studies Unit - Oxford University Centre for the Environment
Working paper N° 1030
January 2008
This paper presents an econometric analysis that compares the performance of different measurements of distance in a gravity model using state data in Mexico. The estimation shows that at this geographical scale, the definition of distance does not affect significantly the explanatory power of the model. However, time-based definitions of distance have a marginal improvement on the model fit in comparison to length-based measures. When geographic specific fix effects are unknown, the model shows that distance measured through the transport network is a better predictor. The results conclude that time-based definitions of distance present several advantages in comparison to traditional length-based definitions. Another implication is that at large geographic scale, where relative distances between every geographic unit are large, the use of length-based distance instead of time to approximate travel costs generates similar results.
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