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From political fragmentation towards a customs union: Border effects of the German Zollverein, 1815 to 1855

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  • SHIUE, CAROL H.

Abstract

Over the first half of the nineteenth century, the Prussian-German customs union known as the Zollverein gradually unified a scattered confederation of sovereign states under an internal free trade agreement. This article uses grain prices to quantify the differential effect of the Zollverein for market integration among Zollverein members versus European powers that were not part of the Zollverein, including France, Switzerland, and the Habsburg Empire of Austria. Overall, this border effect is consistently and substantially less than border effect estimates from contemporary samples. For the 1834 liberalisation round, the implied border effect, calculated as the implied decrease in distance that comes about as the result of the customs border being eliminated, is between 140 and 160 kilometres, with the smaller distance for non-German speaking cities, and the larger distance for German speaking cities. Thus, common language in this sample provides an additional benefit of lowering trade barriers by 11 15 percent in distance, making border elimination more valuable among German-speaking cities than for mixed-language-speaking cities. The article offers a few reasons for why I estimate smaller border effects than are found in studies on twentieth century economies, and the analysis gives a new historical perspective on what drives trade costs and changes in market integration.

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Bibliographic Info

Article provided by Cambridge University Press in its journal European Review of Economic History.

Volume (Year): 9 (2005)
Issue (Month): 02 (August)
Pages: 129-162

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Handle: RePEc:cup:ereveh:v:9:y:2005:i:02:p:129-162_00

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Cited by:
  1. Florian Ploeckl, 2008. "Borders, Market Size and Urban Growth, The Case of Saxon Towns and the Zollverein in the 19th Century," Working Papers 966, Economic Growth Center, Yale University.
  2. Wolf, Nikolaus, 2006. "Was Germany ever united? Borders and domestic trade, 1885 - 1933," Discussion Papers 2006/4, Free University Berlin, School of Business & Economics.
  3. Carol H. Shiue & Wolfgang Keller, 2007. "Markets in China and Europe on the Eve of the Industrial Revolution," American Economic Review, American Economic Association, vol. 97(4), pages 1189-1216, September.
  4. Guinnane, Timothy W. & Ogilvie, Sheilagh, 2008. "Institutions and Demographic Responses to Shocks: Wurttemberg, 1634-1870," Working Papers 44, Yale University, Department of Economics.
  5. Wolf, Nikolaus, 2008. "Was Germany Ever United? Evidence from Intra- and International Trade, 1885 -1933," CEPR Discussion Papers 6796, C.E.P.R. Discussion Papers.
  6. David S. Jacks, 2009. "On the Death of Distance and Borders: Evidence from the Nineteenth Century," NBER Working Papers 15250, National Bureau of Economic Research, Inc.
  7. Max‐Stephan Schulze & Nikolaus Wolf, 2012. "Economic nationalism and economic integration: the Austro‐Hungarian Empire in the late nineteenth century," Economic History Review, Economic History Society, vol. 65(2), pages 652-673, 05.
  8. Florian Ploeckl, 2010. "The Zollverein and the Formation of a Customs Union," Economics Series Working Papers Number 84, University of Oxford, Department of Economics.
  9. Markus Lampe, 2009. "Effects of Bilateralism and the MFN Clause on International Trade – Evidence for the Cobden-Chevalier Network, (1860-1875)," CQE Working Papers 0209, Center for Quantitative Economics (CQE), University of Muenster.
  10. Uebele, Martin, 2011. "National and international market integration in the 19th century: Evidence from comovement," Explorations in Economic History, Elsevier, vol. 48(2), pages 226-242, April.

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