Intra-national Trade Costs: Measurement and Aggregation
NBER Working Paper No. 19872
We develop and apply a procedure to flexibly estimate intra-national border barriers and intra-regional trade costs. Bilateral border barriers very significantly depress Canadian inter-provincial trade for some pairs, though the overall effect is rather small. Bilateral distance imposes much larger inter-provincial trade costs. Contiguity between provinces accounts for little. Intra-regional trade cost variation affects relative bilateral costs and trade flows, and alters comparative statics except in a neutral case rejected by the data. Consistent trade cost aggregation procedures are developed and applied for groups of regions and/or sectors.
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Document Object Identifier (DOI): 10.3386/w19872
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