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Spatial markets and the potential for economic integration between Canadian and U.S. regions *
Author(s) -
Brown W. Mark,
Anderson William P.
Publication year - 2002
Publication title -
papers in regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.937
H-Index - 64
eISSN - 1435-5957
pISSN - 1056-8190
DOI - 10.1111/j.1435-5597.2002.tb01224.x
Subject(s) - tariff , benchmark (surveying) , economic integration , gravity model of trade , productivity , economics , economic geography , international economics , state (computer science) , trade barrier , international trade , geography , macroeconomics , cartography , computer science , algorithm
Abstract The potential for further economic integration among Canadian and American regions is measured by comparing province‐to‐state trade with state‐to‐state trade, where the latter is used as a benchmark of integration. To accomplish this, an attraction constrained gravity model is derived from micro foundations and estimated. The analysis demonstrates that after controlling for variations in output, distance, wages, productivity, and localization economies, the border remains a significant barrier to trade, although much less than previous estimates of the border effect using internal Canadian trade as a benchmark. The model's results also indicate that the border's influence varies across sectors, and the influence appears to be, in part, related to the presence of tariff and non‐tariff barriers.