Going the Distance: Estimating the Effect of Provincial Borders on Trade when Geography Matters

Articles and reports: 11F0019M2017394

Description:

For many goods, such as dairy products and alcoholic beverages, the presence of substantial (non-tariff) barriers to provincial trade is widely recognized. If these non-tariff barriers matter, intraprovincial trade should be stronger than interprovincial trade, all else being equal. However, comparing intraprovincial and interprovincial trade levels is challenging, because intraprovincial trade is heavily skewed toward short-distance flows. When these are not properly taken into account by gravity-based trade models, intraprovincial trade levels—provincial border effects—tend to be overestimated.

Issue Number: 2017394
Author(s): Bemrose, Robby; Brown, Mark; Tweedle, Jesse
FormatRelease dateMore information
HTMLSeptember 14, 2017
PDFSeptember 14, 2017