Intranational Home Bias in Trade

A number of recent studies have found intranational trade to be excessive compared to international trade, based on a gravity specification. The preferred explanation for this finding has been the presence of formal and informal trade barriers, with associated welfare consequences. If such barriers...

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Bibliographic Details
Published in:The review of economics and statistics 2000-11, Vol.82 (4), p.555-563
Main Author: Wolf, Holger C.
Format: Article
Language:English
Subjects:
Bias
Commercial policy
Commodities
Datasets
Economic models
Gross domestic product
International borders
International economic relations
International trade
Shipments
Statistical analysis
Statistics
Studies
Trade
Trade barriers
Trade regionalization
Transportation
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Summary:A number of recent studies have found intranational trade to be excessive compared to international trade, based on a gravity specification. The preferred explanation for this finding has been the presence of formal and informal trade barriers, with associated welfare consequences. If such barriers were indeed the sole culprit, home bias should not exist on the subnational level. We find, however, that home bias is present within U.S. states, suggesting the presence of other causes of excessive home trade.
ISSN:0034-6535
1530-9142
DOI:10.1162/003465300559046