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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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Cited by:
  1. Markus Eberhardt & Zheng Wang & Zhihong Yu, 2014. "From One to Many Central Plans: Drug Advertising Inspections and Intra-National Protectionism in China," CESifo Working Paper Series, CESifo Group Munich 4682, CESifo Group Munich.
  2. Crafts, Nicholas & Klein, Alexander, 2013. "Geography and Intra-National Home Bias: U. S. Domestic Trade in 1949 and 2007," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9309, C.E.P.R. Discussion Papers.
  3. Gabriel Felbermayr & Jasmin Gröschl, 2014. "Within U.S. Trade And The Long Shadow Of The American Secession," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 52(1), pages 382-404, 01.
  4. Delina E. Agnosteva & James E. Anderson & Yoto V. Yotov, 2014. "Intra-national Trade Costs: Measurement and Aggregation," NBER Working Papers 19872, National Bureau of Economic Research, Inc.
  5. 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, Research Institute of Economy, Trade and Industry (RIETI) 13011, Research Institute of Economy, Trade and Industry (RIETI).
  6. Andrew J. Cassey, 2010. "Analyzing the export flow from Texas to Mexico," Staff Papers, Federal Reserve Bank of Dallas, Federal Reserve Bank of Dallas, issue Oct.
  7. Davide Castellani & Giulio Giangaspero & Antonello Zanfei, 2013. "Heterogeneity and distance. Some propositions on how differences across regions, firms and functions affect the role of distance in FDI location decisions," Working Papers, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini 1308, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2013.
  8. Coughlin, Cletus C., 2014. "The great trade collapse and rebound: a state-by-state view," Review, Federal Reserve Bank of St. Louis, Federal Reserve Bank of St. Louis, vol. 96(1), pages 13-33.
  9. Yann Duval & Chorthip Utoktham, 2011. "Trade costs in the India-Mekong Subregion: Identifying Policy Priorities for Trade Facilitation," Working Paper Series, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) 411, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
  10. Yann Duval & Chorthip Utoktham, 2011. "Trade Facilitation in Asia and the Pacific: Which Policies and Measures affect Trade Costs the Most?," Working Paper Series, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) 111, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).

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