Theory of Commercial Gravitational Fields in Economics: The Case of Europe

Abstract

This article is a theoretical development of the gravitational model through an econophysical approach and physical tools. Therefore, this paper attempts to answer the following research question: “Can physics still contribute to the development of the gravitational model in economics?”. To tackle the question, this paper begins with an overview of the basic concepts of Newton’s universal gravitational theory, which was first applied in economics by the distinguished American scientist Isard (1954). Then the concepts and formulas of gravitational fields in physics will be translated into economics, thus reviving Isard’s original multilateralism through the elaboration of an extension of his model apt to describe the multilateralism and multi-country exchanges which characterize international trade. In this regard, the superposition principle of vector is used to offer vector analysis as a tool for mapping the interactions between the economic forces produced by the individual gravitational fields of different countries. A representation of the gravitational field of the European market will be provided. The field concept will extend the analysis from bilateral flows to the analysis of markets in two dimensions.