Russia-EU gas game analysis: evidence from a new proposed trade model
2019
Rasoulinezhad, Ehsan | Jabalameli, Farkhondeh
This paper represents a new proposed trade model of “Intercountries Trade Force (ITF)” which is inspired by Intermolecular Interaction Forces in chemical sciences, and has potential to compensate for the deficiencies of the gravity trade model proposed by Jan Tinbergen in 1962. The main differences between our new model and the earlier gravity trade theory are (i) there is a time-variant variable called the gravity index (GI) which means that the earlier gravity theory was treated as only a variable in our new proposed model and (ii) our new proposed trade model has a higher chance of adoption in the real trade world rather than the earlier gravity trade model which always needs to be expanded by scholars. In order to empirically test our new proposed trade model, we applied it in an empirical econometric model to analyze the Russian gas export to the EU member states, not explored earlier. Results revealed that our new trade proposed model adjusts with the empirical energy trade pattern.
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