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Border effects and the availability of domestic products abroad

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  • Carolyn L. Evans

Abstract

. Trade between countries could fall short of trade within a country because (1) the volume of international trade is less than the volume of domestic trade for a given product (the intensive margin); or (2) some goods that are sold domestically are simply not exported (the extensive margin). My theoretical model illustrates that either of these two factors could explain a given aggregate ‘border effect.’ I examine the empirical relevance of this distinction by isolating the fraction of total domestic production attributable only to exporters, finding that around one‐half of the border effect may be attributed to each explanation. JEL classification: F1 Les effets de frontières et la disponibilité de produits domestiques à l’étranger. Le commerce entre pays peut être moindre que le commerce à l’intérieur d’un pays parce que (1) le volume de commerce international est moindre que le volume du commerce intérieur pour un produit donné(la marge intensive); ou (2) certains biens qui sont vendus à l’intérieur d’un pays ne sont tout simplement pas exportés (la marge extensive). Un modèle théorique montre que l’un et l’autre de ces facteurs pourraient expliquer un certain « effet de frontière » au niveau agrégé. On montre l’importance empirique de cette distinction en isolant la fraction de la production intérieure totale attribuable strictement aux exportateurs, et il s’avère qu’à peu près la moitié de l’effet de frontière est attribuable à chacune des deux explications.

Suggested Citation

  • Carolyn L. Evans, 2006. "Border effects and the availability of domestic products abroad," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 39(1), pages 211-246, February.
  • Handle: RePEc:wly:canjec:v:39:y:2006:i:1:p:211-246
    DOI: 10.1111/j.0008-4085.2006.00345.x
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    References listed on IDEAS

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    Cited by:

    1. Cletus C. Coughlin & Dennis Novy, 2013. "Is the International Border Effect Larger than the Domestic Border Effect? Evidence from US Trade," CESifo Economic Studies, CESifo Group, vol. 59(2), pages 249-276, June.
    2. Liu, Xiaoyun & Whalley, John & Xin, Xian, 2010. "Non-tradable goods and the border effect puzzle," Economic Modelling, Elsevier, vol. 27(5), pages 909-914, September.
    3. Wolf, Nikolaus & Schulze, Max-Stephan & Heinemeyer, Hans Christian, 2008. "Endogenous Borders? Exploring a Natural Experiment on Border Effects," CEPR Discussion Papers 6909, C.E.P.R. Discussion Papers.
    4. Zhiqi Chen & Horatiu A. Rus & Anindya Sen, 2016. "Border Effects Before and After 9/11: Panel Data Evidence Across Industries," The World Economy, Wiley Blackwell, vol. 39(10), pages 1456-1481, October.
    5. Tamara Mata & Carlos Llano, 2013. "Social networks and trade of services: modelling interregional flows with spatial and network autocorrelation effects," Journal of Geographical Systems, Springer, vol. 15(3), pages 319-367, July.
    6. Kei-Mu Yi, 2010. "Can Multistage Production Explain the Home Bias in Trade?," American Economic Review, American Economic Association, vol. 100(1), pages 364-393, March.

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    JEL classification:

    • F1 - International Economics - - Trade

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