Centrality Bias in Inter-City Trade

Tomoya Mori and Jens Wrona

No 1013, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: Large cities (central places) excessively export to smaller cities in their surrounding hinterland. Using Japanese inter-city trade data, we identify a substantial centrality bias: Shipments from central places to their hinterland are 50%-125% larger than predicted by gravity forces. This upward bias stems from aggregating across industries, which are hierarchically distributed across large and small cities, and therefore does not arise in sectoral gravity estimations. When decomposing the centrality bias along the margins of our data, we find that the by far largest part of this aggregation bias can be attributed to the extensive industry margin.

Keywords: Inter-city trade; central place theory; gravity equation; aggregation bias (search for similar items in EconPapers)
JEL-codes: C43 F10 F12 F14 R12 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-geo, nep-mfd and nep-ure
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https://www.econstor.eu/bitstream/10419/270958/1/REP-23-1013.pdf (application/pdf)

Related works:
Working Paper: Centrality Bias in Inter-city Trade (2021)
Working Paper: Centrality Bias in Inter-city Trade (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:1013

DOI: 10.4419/96973179

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