  Although initially originated as a totally empirical relationship to explain
the volume of trade between two partners, gravity equation has been the focus
of several theoretic models that try to explain it. Specialization models are
of great importance in providing a solid theoretic ground for gravity equation
in bilateral trade. Some research papers try to improve specialization models
by adding imperfect specialization to model, but we believe it is unnecessary
complication. We provide a perfect specialization model based on the phenomenon
we call tradability, which overcomes the problems with simpler initial. We
provide empirical evidence using estimates on panel data of bilateral trade of
40 countries over 10 years that support the theoretical model. The empirical
results have implied that tradability is the only reason for deviations of data
from basic perfect specialization models.
