Networks and the disappearance of the intranational home bias

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

No 1124, Working Papers from Department of Applied Economics II, Universidad de Valencia

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 disappears 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)
Pages: 10 pages
Date: 2011-11
New Economics Papers: this item is included in nep-int, nep-net and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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http://repecsrv.uv.es/paper/RePEc/pdf/eec_1124.pdf First version, 2011 (application/pdf)

Related works:
Journal Article: Networks and the disappearance of the intranational home bias (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eec:wpaper:1124

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