Working Paper: NBER ID: w19872
Authors: Delina E. Agnosteva; James E. Anderson; Yoto V. Yotov
Abstract: 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.
Keywords: intranational trade; trade costs; structural gravity model; Canada
JEL Codes: F1; R1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| bilateral border barriers (F55) | Canadian interprovincial trade (N72) |
| internal border barriers (F55) | interprovincial manufacturing trade (N72) |
| bilateral distance (C49) | interprovincial trade costs (N72) |
| contiguity between provinces (F55) | intraregional trade costs (F12) |
| intraregional cost variation (R15) | accurate comparative statics (D50) |
| unexplained trade barriers (UTBs) (F13) | interprovincial trade costs (N72) |