W. Mark Brown () (Departments of Geography and Agricultural Economics, McGill University, Burnside Hall, 805 Sherbrooke Street West, Montreal, QC H3A 2K6, Canada) William P. Anderson (Department of Geography, Boston University, 675 Commonwealth Avenue, Boston, MA 02215-1401, USA)
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The potential for further economic integration among Canadian and American regions is measured by comparing province-to-state trade with state-to-state trade, where the latter is used as a benchmark of integration. To accomplish this, an attraction constrained gravity model is derived from micro foundations and estimated. The analysis demonstrates that after controlling for variations in output, distance, wages, productivity, and localization economies, the border remains a significant barrier to trade, although much less than previous estimates of the border effect using internal Canadian trade as a benchmark. The model's results also indicate that the border's influence varies across sectors, and the influence appears to be, in part, related to the presence of tariff and non-tariff barriers.
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Find related papers by JEL classification: F14 - International Economics - - Trade - - - Country and Industry Studies of Trade R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography) C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
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James E. Anderson & Eric van Wincoop, 2004.
"Trade Costs,"
NBER Working Papers
10480, National Bureau of Economic Research, Inc.
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James E. Anderson & Eric van Wincoop, 2004.
"Trade Costs,"
Journal of Economic Literature,
American Economic Association, vol. 42(3), pages 691-751, September.
[Downloadable!] (restricted)