The gravity model is one of the great success stories of economics. The success of the model is its great explanatory power: the equations fit well statistically and give quite similar answers across many different datasets – inferred bilateral trade costs are big, varying with distance and border crossings.

Despite this success, the inferred trade costs have had little impact on the broader concerns of economics until very recently. The costs have been hard to integrate with other models used to understand trade. There are two difficulties. First, national buyer and seller responses to bilateral trade costs depend on their incidence instead of the full cost. Second, the high dimensionality of bilateral trade costs requires aggregation, both for elementary comprehension of magnitude and for use in the wide class of trade models that focus on resource and expenditure allocation as sectoral aggregates.

This paper discusses a solution to both problems. Measures of aggregate incidence described here provide intuitive guides to the consequences of geography, illustrated with results drawn from a study of Canada's changing economic geography (Anderson and Yotov 2008). The paper goes on to show how the aggregated incidence measures can be used in a standard class of applied general equilibrium trade models. This opens the way to richer applied work, both in simulation and in econometric inference.