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Intra-national versus international trade in the European Union: why do national borders matter?

  • Chen, Natalie

Based on the estimation of a theoretically consistent gravity equation, together with a careful computation of transportation costs across countries and industries, the Paper first provides estimates of ‘border effects’ among EU countries. The second objective is to examine the reasons for border effects. Contrarily to the previous findings reported in the literature, we show that national trade barriers do provide an explanation. In particular, technical barriers to trade, together with firm and product-specific information costs, increase border effects, whereas non-tariff barriers are not significant. Our results however suggest that these barriers are not the only cause since the spatial clustering of firms is also shown to matter.

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Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 63 (2004)
Issue (Month): 1 (May)
Pages: 93-118

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Handle: RePEc:eee:inecon:v:63:y:2004:i:1:p:93-118
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505552

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  9. Carolyn Evans, 2006. "Border effects and the availability of domestic products abroad," Canadian Journal of Economics, Canadian Economics Association, vol. 39(1), pages 211-246, February.
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  18. Holger C. Wolf, 2000. "Intranational Home Bias In Trade," The Review of Economics and Statistics, MIT Press, vol. 82(4), pages 555-563, November.
  19. Helliwell, John F, 2002. "Measuring the Width of National Boarders," Review of International Economics, Wiley Blackwell, vol. 10(3), pages 517-24, August.
  20. John F. Helliwell, 1997. "National Borders, Trade and Migration," NBER Working Papers 6027, National Bureau of Economic Research, Inc.
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