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The Border Effect and the Nonlinear Relationship between Trade and Distance

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  • Nuria Gallego
  • Carlos Llano

Abstract

The border-effect literature confirms that sub-national units tend to trade more with the rest of their country than with foreign markets. However, it is likely that ongoing processes of trade integration will generate a trade-off between internal and external integration for sub-national units within countries. In this paper we estimate the internal and external border effect, using a novel dataset that captures intra- and international shipments between Spanish regions and regions in eight European countries with alternative treatments of the nonlinear relationship between distance and trade.

Suggested Citation

  • Nuria Gallego & Carlos Llano, 2014. "The Border Effect and the Nonlinear Relationship between Trade and Distance," Review of International Economics, Wiley Blackwell, vol. 22(5), pages 1016-1048, November.
  • Handle: RePEc:bla:reviec:v:22:y:2014:i:5:p:1016-1048
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    Cited by:

    1. A. Nchake Mamello & Edwards Lawrence & N. Kaya Tresor, 2017. "Working Paper 272 - Price effects of borders between Lesotho and South Africa," Working Paper Series 2389, African Development Bank.
    2. Llano, C. & De la Mata, T. & Díaz-Lanchas, J. & Gallego, N., 2017. "Transport-mode competition in intra-national trade: An empirical investigation for the Spanish case," Transportation Research Part A: Policy and Practice, Elsevier, vol. 95(C), pages 334-355.
    3. Márquez-Ramos , Laura, 2016. "Regionalism, subnational variation and gravity: A four-country tale," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 35, pages 7-36.

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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