Scholion.ai

The Economic Significance of National Border Effects

Carolyn L. Evans

American Economic Review · 2003 · Volume 93 · Issue 4

DOI: 10.1257/000282803769206304

Abstract

To address the economic significance of national border effects, this paper provides evidence on two fundamental questions: (1) Do large border effects arise because of high perceived-price wedges between foreign and domestic products, or because imports and domestic goods are very close substitutes?; and (2) If price wedges are important, do they reflect distortionary barriers to trade or do they arise from nondistortionary factors, such as differences in transactions costs or product characteristics? I conclude that, while border effects may imply barriers, welfare costs, and a role for policy, distortions are probably not as substantial as initial border results suggested. (JEL F1)

Keywords

Empirical Studies of Trade, Models of Trade with Imperfect Competition and Scale Economies, Fragmentation

Enable JavaScript for citation tools and additional paper interactions.