Sharif Digital Repository

In the past 10 years Iran has been emerging as a major car producer in the world. However, due to delays in economic reforms, Iranian car exports have not increased as much as production. This paper presents a first estimation of the Iranian export potential in the car industry. Based on new theoretical developments of the gravity equation, an empirical bilateral trade model is proposed. It includes sectoral variables (car production, import tariffs), as well as other original variables, such as expectations and hysteresis. We then develop a dataset which includes the 40 major car-exporting countries in the world, 34 importing countries, a 10-year time period as well as four car production...