Intra-national versus International Trade in the European Union: Why do National Borders Matter?

Natalie Chen

No 3407, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Based on the estimation of a theoretically consistent gravity equation, together with a careful computation of transportation costs across countries and industries, the Paper first provides estimates of ?border effects? among EU countries. The second objective is to examine the reasons for border effects. Contrarily to the previous findings reported in the literature, we show that national trade barriers do provide an explanation. In particular, technical barriers to trade, together with firm and product-specific information costs, increase border effects, whereas non-tariff barriers are not significant. Our results however suggest that these barriers are not the only cause since the spatial clustering of firms is also shown to matter.

Keywords: Border effects; Eu countries; Industries; Gravity equation (search for similar items in EconPapers)
JEL-codes: F14 F15 (search for similar items in EconPapers)
Date: 2002-06
New Economics Papers: this item is included in nep-eec and nep-geo
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

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Journal Article: Intra-national versus international trade in the European Union: why do national borders matter? (2004)
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