Quantitative Justification for the Gravity Model in Economics

The gravity model in economics describes the trade flow between two countries as a function of their Gross Domestic Products (GDPs) and the distance between them. This model is motivated by the qualitative similarity between the desired dependence and the dependence of the gravity force (or potential energy) between the two bodies on their masses and on the distance between them. In this paper, we provide a quantitative justification for this economic formula