The Border Effect and the Nonlinear Relationship between Trade and Distance

33 Pages Posted: 4 Oct 2014

See all articles by Nuria Gallego

Nuria Gallego

Universidad Autonoma de Madrid

Carlos Llano

Universidad Autónoma de Madrid

Date Written: November 2014

Abstract

The border‐effect literature confirms that sub‐national units tend to trade more with the rest of their country than with foreign markets. However, it is likely that ongoing processes of trade integration will generate a trade‐off between internal and external integration for sub‐national units within countries. In this paper we estimate the internal and external border effect, using a novel dataset that captures intra‐ and international shipments between Spanish regions and regions in eight European countries with alternative treatments of the nonlinear relationship between distance and trade.

Suggested Citation

Gallego, Nuria and Llano, Carlos, The Border Effect and the Nonlinear Relationship between Trade and Distance (November 2014). Review of International Economics, Vol. 22, Issue 5, pp. 1016-1048, 2014. Available at SSRN: https://ssrn.com/abstract=2505253 or http://dx.doi.org/10.1111/roie.12152

Nuria Gallego (Contact Author)

Universidad Autonoma de Madrid ( email )

Campus de Cantoblanco
C/Kelsen, 1
Madrid, 28049
Spain

Carlos Llano

Universidad Autónoma de Madrid ( email )

Facultad de Ciencias Económicas y Empresariales
Departamento de Análisis Económico
Madrid, Madrid 28049
Spain
+34 914972910 (Phone)

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