Borders, Geography, and Oligopoly: Evidence from the Wind Turbine Industry

A. Kerem Coşar, Paul L. E. Grieco and Felix Tintelnot
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Paul L. E. Grieco: Pennsylvania State University

The Review of Economics and Statistics, 2015, vol. 97, issue 3, 623-637

Abstract: Using a microlevel data set of wind turbine installations in Denmark and Germany, we estimate a structural oligopoly model with cross-border trade and heterogeneous firms. Our approach separately identifies border-related from distance-related variable costs and bounds the fixed cost of exporting for each firm. In the data, firms' market shares drop precipitously at the border. We find that 40 percent to 50 percent of the gap can be attributed to national border costs. Counterfactual analysis indicates that eliminating national border frictions would increase total welfare in the wind turbine industry by 4 percent in Denmark and 6 percent in Germany.

Keywords: wind turbines; oligopoly; structural oligopoly model; denmark; germany; border frictions (search for similar items in EconPapers)
JEL-codes: L13 Q20 Q56 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (11)

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Related works:
Working Paper: Borders, Geography and Oligopoly: Evidence from the Wind Turbine Industry (2014)
Working Paper: Borders, Geography, and Oligopoly: Evidence from the Wind Turbine Industry (2012)
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