Intra-national trade costs: Assaying regional frictions

By Delina E. Agnosteva, James E. Anderson, Yoto V. Yotov. European Economic Review, 2019

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Abstract The effects of intra-regional, inter-regional and international frictions on the trade flows of Canada’s provinces are disentangled by gravity model techniques. Unexplained Trade Barriers (UTBs) are the difference between inter-provincial trade barriers inferred from pair fixed effects and from bilateral distance and contiguity. The estimates reveal large intra-national trade costs and UTBs that vary significantly across Canada’s provinces. Decomposition of UTBs into relative border effects and a systematic residual UTB is based on a novel Cobb–Douglas aggregator of intra-provincial and pure inter-provincial trade costs. Variation of both components across provinces is big.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/454fc4bf5f10c02ef05806de99229baac7853925