Networks and the disappearance of the intranational home bias
AbstractPrevious studies have shown that, not only countries, but also regions have a preference to trade within their administrative borders. Using unique trade flows data, we also find a large home bias in Spanish intranational trade. However, we show that this home bias disappears once we take into account the higher density of social and business networks within regions than between regions. We also find that the home bias does not disappear if intranational trade flows are measured in quantity rather than value. This fact might explain why previous studies on other European countries still find an intranational home bias, even when network effects are taken into account.
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Bibliographic InfoPaper provided by Department of Applied Economics II, Universidad de Valencia in its series Working Papers with number 1124.
Length: 10 pages
Date of creation: Nov 2011
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More information through EDIRC
home bias; state borders; intranational trade; networks; business groups; Spain;
Other versions of this item:
- Garmendia, Aitor & Llano, Carlos & Minondo, Asier & Requena, Francisco, 2012. "Networks and the disappearance of the intranational home bias," Economics Letters, Elsevier, vol. 116(2), pages 178-182.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F15 - International Economics - - Trade - - - Economic Integration
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-21 (All new papers)
- NEP-INT-2011-11-21 (International Trade)
- NEP-NET-2011-11-21 (Network Economics)
- NEP-SOC-2011-11-21 (Social Norms & Social Capital)
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