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How Britain Unified Germany: Trade Routes and the Formation of the Zollverein

Nikolaus Wolf and Thilo Rene Huning

No 13634, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: If trade costs vary with trade routes, the location of a state can shape its bargaining power. To show this, we study an exogenous change in Prussian borders 1815 following a British intervention. This led to the formation of the Zollverein, the first customs union in history. We document how trade routes mattered for the decision of states to join a customs union. We present a model featuring tariffs that depend on location. Calibrated to historical data the model replicates sequence of historical decisions. With counterfactual borders absent Britain's intervention, the Zollverein would not have been formed.

Keywords: Trade (search for similar items in EconPapers)
JEL-codes: D74 F13 F15 F55 N73 (search for similar items in EconPapers)
Date: 2019-03
New Economics Papers: this item is included in nep-geo, nep-his and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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