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The political economy of regional integration projects at borders where poor and rich meet: The role of cross-border shopping and community sorting

  • Dascher, Kristof
  • Haupt, Alexander

At borders between poor and rich countries, huge service price differentials could be exploited to mutual benefit, offering better-paid job opportunities to the poor as well as better shopping opportunities to the rich. However, cross-border shopping is often limited by the substantial transaction costs of crossing the border. Moreover, countries and regions frequently fail to cut these transaction costs even when they have the opportunity to do so. We provide a politico-economic analysis of cross-border integration projects. More specifically, we show how the political outcome depends on (i) intra-country mobility, (ii) decision making and housing ownership regimes, and (iii) federal grants and international border regulations. Our analysis builds on two key characteristics in which individuals differ: interregional mobility and intercultural ability.

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

Volume (Year): 69 (2011)
Issue (Month): 1 (January)
Pages: 148-164

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Handle: RePEc:eee:juecon:v:69:y:2011:i:1:p:148-164
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622905

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  4. Ravi Kanbur & Michael Keen, 1991. "Jeux Sans Frontieres: Tax Competition and Tax Coordination when Countries Differ in Size," Working Papers 819, Queen's University, Department of Economics.
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  13. Stephen Calabrese & Dennis Epple & Thomas Romer & Holger Sieg, 2005. "Local Public Good Provision: Voting, Peer Effects, and Mobility," NBER Working Papers 11720, National Bureau of Economic Research, Inc.
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  16. Kristof Dascher & Alexander Haupt, 2008. "The Political Economy of Regional Integration Projects at Borders where Rich and Poor Meet: The Role of Cross-Border Shopping and Community Sorting," CESifo Working Paper Series 2280, CESifo Group Munich.
  17. Kessler, Anke S. & Lulfesmann, Christoph, 2005. "Tiebout and redistribution in a model of residential and political choice," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 501-528, February.
  18. Mansoorian, Arman & Myers, Gordon M., 1993. "Attachment to home and efficient purchases of population in a fiscal externality economy," Journal of Public Economics, Elsevier, vol. 52(1), pages 117-132, August.
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