Trade Costs, Market Access and Economic Geography: Why the Empirical Specification of Trade Costs Matters

41 Pages Posted: 9 Aug 2007

See all articles by Erik Maarten Bosker

Erik Maarten Bosker

University of Groningen; Erasmus University Rotterdam (EUR) - Department of Economics

Harry Garretsen

Utrecht University - School of Economics; CESifo (Center for Economic Studies and Ifo Institute); Radboud University Nijmegen - Department of Economics

Date Written: August 2007

Abstract

Trade costs are crucial in new economic geography (NEG) models. The unavailability of actual trade costs data requires the approximation of trade costs. Most NEG studies do not deal with the ramifications of the particular trade costs specification used. This paper shows that the specification of trade costs matters. Estimations of a NEG wage equation for a sample of 80 countries show how the relevance of the key NEG variable, market access, depends upon the trade costs specification. Our conclusion is that NEG needs to (re-)examine the sensitivity of its empirical findings to the handling of trade costs.

JEL Classification: R12, F1, F12

Suggested Citation

Bosker, Erik Maarten and Garretsen, Harry, Trade Costs, Market Access and Economic Geography: Why the Empirical Specification of Trade Costs Matters (August 2007). CESifo Working Paper No. 2071, Available at SSRN: https://ssrn.com/abstract=1005576

Erik Maarten Bosker (Contact Author)

University of Groningen ( email )

P.O. Box 800
9700 AH Groningen, Groningen 9700 AV
Netherlands

Erasmus University Rotterdam (EUR) - Department of Economics ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Harry Garretsen

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands
+31 0 30 253 9810 (Phone)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.cesifo.de

Radboud University Nijmegen - Department of Economics ( email )

Nijmegen, 6500 HK
Netherlands
+31 24 361 5889 (Phone)
+31 24 361 1846 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
160
Abstract Views
794
rank
201,939
PlumX Metrics