Is the international border effect larger than the domestic border effect?: evidence from US trade

Cletus Coughlin and Dennis Novy

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Many studies have found that international borders represent large barriers to trade. But how do international borders compare to domestic border barriers? We investigate international and domestic border barriers in a unified framework. We consider a data set of exports from individual US states to foreign countries and combine it with trade flows between and within US states. After controlling for distance and country size, we estimate that relative to state-to-state trade, crossing an individual US state’s domestic border appears to entail a larger trade barrier than crossing the international US border. Due to the absence of governmental impediments to trade within the United States, this result is surprising. We interpret it as highlighting the concentration of economic activity and trade flows at the local level.

Keywords: international border; intranational home bias; domestic border; gravity; trade costs; distance (search for similar items in EconPapers)
JEL-codes: F10 F15 (search for similar items in EconPapers)
Date: 2013-06
New Economics Papers: this item is included in nep-int and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

Published in CESifo Economic Studies, June, 2013, 59(2), pp. 249-276. ISSN: 1610-241X

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Related works:
Journal Article: Is the International Border Effect Larger than the Domestic Border Effect? Evidence from US Trade (2013)
Working Paper: Is the International Border Effect Larger than the Domestic Border Effect? Evidence from U.S. Trade (2012)
Working Paper: Is the international border effect larger than the domestic border effect? Evidence from US trade (2012)
Working Paper: Is the International Border Effect Larger than the Domestic Border Effect? Evidence from U.S. Trade (2009)
Working Paper: Is the international border effect larger than the domestic border effect? evidence from U.S. trade (2009)
Working Paper: Is the International Border Effect Larger than the Domestic Border Effect? Evidence from U.S. Trade (2009)
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