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Revisiting the importance of border effect in sub‐national regions. Evidence from a quasi‐experimental design

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  • Jacint Balaguer
  • Jordi Ripollés

Abstract

Literature provides significant border effects on consumer prices even for sub‐national regions. Nevertheless, Gorodnichenko and Tesar showed that the evidence from the usual methodology could be illusory if there is cross‐regional heterogeneity in the distribution of within‐region price differentials. We designed a quasi‐experiment that, using a transport fuel dataset, is applied to the Spanish regions. We found that, despite controlling for regional tax divergences, price differences remained critically dependent on regions. However, results suggest that the presence of borders per se is practically negligible to explain the lack of regional integration. Factors underlying the distribution heterogeneity are responsible for this. La literatura proporciona efectos frontera significativos en los precios al consumidor, incluso para regiones subnacionales. Sin embargo, Gorodnichenko y Tesar han demostrado que la evidencia de la metodología habitual podría ser ilusoria si existe una heterogeneidad interregional en la distribución de los diferenciales de precios dentro de la región. Se diseñó un cuasi experimento que utiliza un conjunto de datos de combustible para el transporte que se aplicó a las regiones españolas. Se encontró que, a pesar de controlar las disparidades fiscales regionales, las diferencias de precios siguieron siendo críticamente dependientes de las regiones. Sin embargo, los resultados sugieren que la presencia de fronteras, por sí mismas, es prácticamente despreciable a la hora de explicar la falta de integración regional. Los factores subyacentes a la heterogeneidad de la distribución son responsables de esto. 研究論文では、地方レベルの地域でさえ消費者価格に対して有意な境界効果が認められることが示されている。それにもかかわらず、GorodnichenkoとTesarは、地域内価格差の分布に地域間の異質性がある場合は、通常の方法で得られたエビデンスは非現実的である可能性があることを示した。我々は、交通燃料のデータセットを用いてデザインした準実験研究を、スペインの地方を対象に実施した。地方による課税額の違いを補正したにもかかわらず、価格差はなおも強く地域依存的であることがわかった。しかしながら、結果は、境界の存在そのものは、地域の統合を説明するのには実質的に不要であることを示唆している。これは、分布の異質性の基礎をなす要因によるものである。

Suggested Citation

  • Jacint Balaguer & Jordi Ripollés, 2018. "Revisiting the importance of border effect in sub‐national regions. Evidence from a quasi‐experimental design," Papers in Regional Science, Wiley Blackwell, vol. 97(4), pages 1113-1130, November.
  • Handle: RePEc:bla:presci:v:97:y:2018:i:4:p:1113-1130
    DOI: 10.1111/pirs.12298
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    2. Balaguer, Jacint & Ripollés, Jordi, 2020. "Do classes of gas stations contribute differently to fuel prices? Evidence to foster effective competition in Spain," Energy Policy, Elsevier, vol. 139(C).

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