Centrality bias in inter-city trade

Tomoya Mori and Jens Wrona

Regional Science and Urban Economics, 2024, vol. 109, issue C

Abstract: Using Japanese inter-city trade data, we find a substantial centrality bias in aggregate gravity estimations: Shipments from large cities (central places) to their hinterland are 50%–125% larger than predicted by gravity forces. We argue that this discrepancy results from aggregating across industries, that concentrate in a few central places, which predominantly serve their respective hinterlands. Decomposing the centrality bias along the margins of our data, we attribute most of the centrality bias to substantially larger extensive industry margins in exports from larger cities to their smaller hinterland cities than vice versa.

Keywords: Inter-city trade; Central place theory; Gravity equation; Aggregation bias (search for similar items in EconPapers)
JEL-codes: C43 F12 F14 R12 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:109:y:2024:i:c:s0166046224000917

DOI: 10.1016/j.regsciurbeco.2024.104060

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