BORDER EFFECTS WITHOUT BORDERS: WHAT DIVIDES JAPAN'S INTERNAL TRADE? |
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| Authors: | Jens Wrona |
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| Institution: | 1. Heinrich‐Heine‐University Düsseldorf, Germany;2. DICE, GermanyI am grateful to Peter Egger, Benjamin Jung, Wilhelm Kohler, Sebastian Krautheim, Udo Kreickemeier, Alfred Lameli, Thierry Mayer, Tomoya Mori, Yasusada Murata, Douglas Nelson, Volker Nitsch, Dennis Novy, Pierpaolo Parrotta, Giovanni Peri, Frédéric Robert‐Nicoud, Michael Ryan, Daniel Sturm, Jens Südekum, Jacques Thisse, Johannes Van Biesebroeck, Nikolaus Wolf, and Thilo Wrona as well as to the participants of the Annual Congress of the EEA in Mannheim, the Annual Congress of the German Economic Association in Münster, the European Meeting of the UEA in Lisbon, the Annual Meeting of the ETSG in Paris, the Midwest Economic Theory and International Trade Conference at Penn State University, the Spring Meeting of Young Economists in Lisbon, the G?ttingen Workshop for International Economics, the FIW‐Research Conference “International Economics” in Vienna, and the Research Seminar at the London School of Economics, the University of Düsseldorf, and the University of Bayreuth for providing helpful comments and discussion. I thank Riccarda Langer, Yuka Manabe, and Leopold Schiele for their excellent research assistance. |
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| Abstract: | This article identifies a “border” effect in the absence of a border. The finding that trade between east and west Japan is 23.1% to 51.3% lower than trade within both country parts is established despite the absence of an obvious east–west division due to historical borders, cultural differences, or past civil wars. Postwar agglomeration processes, reflected by the contemporaneous structure of Japan's business and social networks, instead of cultural differences, induced by long‐lasting historical shocks, are identified as an explanation for the east–west bias in intra‐Japanese trade. |
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