Networks and the disappearance of the intranational home bias

Aitor Garmendia, Carlos Llano, Asier Minondo () and Francisco Requena Silvente

Economics Letters, 2012, vol. 116, issue 2, 178-182

Abstract: Previous studies have shown that, not only countries, but also regions have a preference to trade within their administrative borders. Using unique trade flows data, we also find a large home bias in Spanish intranational trade. However, we show that this home bias tends to disappear once we take into account the higher density of social and business networks within regions than between regions. We also find that the home bias does not disappear if intranational trade flows are measured in quantity rather than value. This fact might explain why previous studies on other European countries still find an intranational home bias, even when network effects are taken into account.

Keywords: Home bias; State borders; Intranational trade; Networks; Business groups; Spain (search for similar items in EconPapers)
JEL-codes: F12 F15 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (40)

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Related works:
Working Paper: Networks and the disappearance of the intranational home bias (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:116:y:2012:i:2:p:178-182

DOI: 10.1016/j.econlet.2012.02.021

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