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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 within and between U.S. states. After controlling distance and country/state size, we find that relative to state-to-state trade, crossing an individual U.S. state’s domestic border entails a larger trade barrier than crossing the international U.S. border. This finding highlights the concentration of trade flows at the local level and the importance of factors such as informational barriers and transportation costs even for the relatively short distances associated with state-to-state trade.

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Paper provided by University of Nottingham, GEP in its series Discussion Papers with number 09/29.

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Handle: RePEc:not:notgep:09/29

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

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References

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Cited by:
  1. Flora Bellone & Kozo Kiyota & Toshiyuki Matsuura & Patrick Musso & Lionel Nesta, 2012. "International Productivity Gaps and the Export Status of Firms: Evidence from France and Japan," GREDEG Working Papers 2012-07, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis, revised Jan 2014.
  2. Andrew J. Cassey, 2010. "Analyzing the export flow from Texas to Mexico," Staff Papers, Federal Reserve Bank of Dallas, issue Oct.
  3. 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).
  4. 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.
  5. 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.
  6. repec:cge:warwcg:111 is not listed on IDEAS
  7. 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).

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