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- where Ti is the location parameter (also called state of technology by Eaton and Kortum 2002) and θ governs the variation within the distribution and thereby also the comparative advantage within the continuum of goods. Plugging in Equation (36) in Fi(z) leads to Gij(p) = Pr[Pij ≤ p] = 1 − e−[Ti(citij)−θ]pθ . Noting that the distribution of prices for which a country j buys is given by Gj(p) = Pr[Pj ≤ p] = 1 − n i=1[1 − Gij(p)] leads to: Gj(p) = 1 − e−Φjpθ , (38) where Φj = n i=1 Ti (citij)−θ .
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