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Patterns of Intra- and Inter-State Trade

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  • Holger C. Wolf
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    Abstract

    Recent studies suggest that intranational trade is "excessive' compared to international trade. An intuitive explanation for this home bias is provided by national trade barriers. A dataset of trade between US states, however, reveals that home bias extends to subnational units. The data suggest three additional stylized facts. First, shipment distances are shorter for intermediate than for final goods. Second, states located close to each other tend to have similar production patterns. Third, trade flows are higher among states with similar production patterns. The stylized facts are consistent with a complementary explanation of home bias resulting from a spatial clustering of production driven by natural and created comparative advantage.

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    File URL: http://www.nber.org/papers/w5939.pdf
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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5939.

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    Date of creation: Feb 1997
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    Publication status: published as Holger C Wolf. "Intranational Home Bias In Trade," The Review of Economics and Statistics. Volume 82, Issue 4 (November 2000) Pages: 555-563
    Handle: RePEc:nbr:nberwo:5939

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