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Is the International Border Effect Larger than the Domestic Border Effect? Evidence from U.S. Trade

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  • Cletus C. Coughlin
  • Dennis Novy

Abstract

Many studies have found that international borders represent large barriers to trade. But how do international borders compare to domestic border barriers? We investigate international and domestic border barriers in a unified framework. We consider a data set of exports from individual U.S. states to foreign countries and combine it with trade flows between and within U.S. states. After controlling for distance and country size, we estimate that relative to state-to-state trade, crossing an individual U.S. state's domestic border appears to entail a larger trade barrier than crossing the international U.S. border. Due to the absence of governmental impediments to trade within the United States, this result is surprising. We interpret it as highlighting the concentration of economic activity and trade flows at the local level.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp1162.

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Date of creation: Sep 2012
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Handle: RePEc:cep:cepdps:dp1162

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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Keywords: International border; intranational home bias; domestic border; gravity; trade costs; distance;

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References

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Cited by:
  1. Felbermayr, Gabriel & Gröschl, Jasmin, 2014. "Within U.S. trade and the long shadow of the american secession," Munich Reprints in Economics 20587, University of Munich, Department of Economics.
  2. Crafts, Nicholas & Klein, Alexander, 2013. "Geography and Intra-National Home Bias: U. S. Domestic Trade in 1949 and 2007," CEPR Discussion Papers 9309, C.E.P.R. Discussion Papers.
  3. Yann Duval & Chorthip Utoktham, 2011. "Trade costs in the India-Mekong Subregion: Identifying Policy Priorities for Trade Facilitation," Working Paper Series 411, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
  4. Flora BELLONE & KIYOTA Kozo & MATSUURA Toshiyuki & Patrick MUSSO & Lionel NESTA, 2013. "International Productivity Gaps and the Export Status of Firms: Evidence from France and Japan," Discussion papers 13011, Research Institute of Economy, Trade and Industry (RIETI).
  5. Yann Duval & Chorthip Utoktham, 2011. "Trade Facilitation in Asia and the Pacific: Which Policies and Measures affect Trade Costs the Most?," Working Paper Series 111, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
  6. Andrew J. Cassey, 2010. "Analyzing the export flow from Texas to Mexico," Staff Papers, Federal Reserve Bank of Dallas, issue Oct.
  7. repec:cge:warwcg:111 is not listed on IDEAS

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