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Border effects without borders: What divides Japan's internal trade?

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  • Wrona, Jens

Abstract

Over the last 20 years the trade literature repeatedly documented the trade-reducing effects of inter- and intra-national borders. Thereby, the puzzling size and persistence of observed border effects from the beginning raised doubts on the role of underlying political borders. However, when observed border effects are not caused by political trade barriers, why should their spatial dimension then inevitably coincide with the geography of present or past political borders? This paper identifies a "border effect" in the absence of a border. Thereby, the finding that trade between East- and West-Japan is 23.1% - 51.3% lower than trade within both country parts, is established in the absence of an obvious east-west division due to historical borders, cultural differences or past civil wars. From a rich set of explanatory variables post-war agglomeration processes, reflected by the contemporaneous structure of Japan's business and social networks, rather than cultural differences, shaped by long-lasting historical shocks, are identified as an explanation for the east-west bias in intra-Japanese trade.

Suggested Citation

  • Wrona, Jens, 2015. "Border effects without borders: What divides Japan's internal trade?," DICE Discussion Papers 185, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  • Handle: RePEc:zbw:dicedp:185
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    Cited by:

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    2. Tomoya Mori & Jens Wrona, 2018. "Inter-city Trade," KIER Working Papers 995, Kyoto University, Institute of Economic Research.
    3. Wang, Chenglong & Liu, Hui & Zhang, Mengtian & Wei, Zongcai, 2018. "The border effect on urban land expansion in China: The case of Beijing-Tianjin-Hebei region," Land Use Policy, Elsevier, vol. 78(C), pages 287-294.
    4. Anna Goeddeke & Justus Haucap & Annika Herr & Christian Wey, 2018. "Flexibility in Wage Setting Under the Threat of Relocation," LABOUR, CEIS, vol. 32(1), pages 1-22, March.
    5. Rongji Huang & Tengfei Nie & Yangguang Zhu & Shaofu Du, 2020. "Forecasting Trade Potential Between China and the Five Central Asian Countries: Under the Background of Belt and Road Initiative," Computational Economics, Springer;Society for Computational Economics, vol. 55(4), pages 1233-1247, April.
    6. El-Sahli, Zouheir & Gullstrand, Joakim & Olofsdotter, Karin, 2017. "The Internal and External Effects of Offshoring on Job Security," Working Papers 2017:14, Lund University, Department of Economics.
    7. Bonnet, Céline & Schain, Jan Philip, 2017. "An empirical analysis of mergers: Efficiency gains and impact on consumer prices," DICE Discussion Papers 244, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    8. Jens Suedekum, 2018. "Economic effects of differences in dialect," IZA World of Labor, Institute of Labor Economics (IZA), pages 414-414, January.
    9. HAYAKAWA Kazunobu & Hans R.A. KOSTER & TABUCHI Takatoshi & Jacques-François THISSE, 2021. "High-speed Rail and the Spatial Distribution of Economic Activity: Evidence from Japan's Shinkansen," Discussion papers 21003, Research Institute of Economy, Trade and Industry (RIETI).
    10. Jorge Diaz-Lanchas & Carlos Llano & José Luis Zofio, 2019. "A trade hierarchy of cities based on transport cost thresholds," JRC Working Papers on Territorial Modelling and Analysis 2019-02, Joint Research Centre (Seville site).
    11. Tomoya Mori & Jens Wrona, 2021. "Centrality Bias in Inter-city Trade," KIER Working Papers 1056, Kyoto University, Institute of Economic Research.
    12. Arnarson, Björn Thor & Gullstrand, Joakim, 2016. "Linking Services to Manufacturing Exports," Working Papers 2016:27, Lund University, Department of Economics, revised 24 Feb 2017.
    13. Kazunobu Hayakawa & Ikumo Isono & Satoru Kumagai, 2020. "Transportation Costs in Archipelagos: Evidence from Indonesia," The Developing Economies, Institute of Developing Economies, vol. 58(3), pages 227-241, September.

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    More about this item

    Keywords

    Border Effects; Gravity Equation; Intra-national Trade; Japan;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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