Borders, Ethnicity and Trade / Jenny C. Aker, Michael W. Klein, Stephen A. O'Connell, Muzhe Yang.

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Aker, Jenny C

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w15960.Publication details: Cambridge, Mass. National Bureau of Economic Research 2010.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: Do national borders and ethnicity contribute to market segmentation between and within countries? This paper uses unique and high-frequency data on narrowly-defined goods to gauge the extent to which a national border impedes trade between developing countries (Niger and Nigeria). Using a regression discontinuity approach, we find a significant price change at the national border, but one that is lower in magnitude than that found for industrialized countries. Yet unlike that literature, and in line with important characteristics of African economies, we investigate the role of ethnicity in mitigating and exacerbating the border effect. We find that a common ethnicity is linked to lower price dispersion across countries, yet ethnic diversity creates an internal border within Niger. The primary mechanism behind the internal border effect appears to be related to the role of ethnicity in facilitating access to credit in rural markets.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w15960 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w15958 Competing Engines of Growth: Innovation and Standardization /	nber w15959 Market Structure and Innovation: A Dynamic Analysis of the Global Automobile Industry /	nber w1596 On Consequences and Criticisms of Monetary Targeting /	nber w15960 Borders, Ethnicity and Trade /	nber w15961 The Online Laboratory: Conducting Experiments in a Real Labor Market /	nber w15962 Disability Risk, Disability Insurance and Life Cycle Behavior /	nber w15963 Inertia and Overwithholding: Explaining the Prevalence of Income Tax Refunds /	Next

May 2010.

Do national borders and ethnicity contribute to market segmentation between and within countries? This paper uses unique and high-frequency data on narrowly-defined goods to gauge the extent to which a national border impedes trade between developing countries (Niger and Nigeria). Using a regression discontinuity approach, we find a significant price change at the national border, but one that is lower in magnitude than that found for industrialized countries. Yet unlike that literature, and in line with important characteristics of African economies, we investigate the role of ethnicity in mitigating and exacerbating the border effect. We find that a common ethnicity is linked to lower price dispersion across countries, yet ethnic diversity creates an internal border within Niger. The primary mechanism behind the internal border effect appears to be related to the role of ethnicity in facilitating access to credit in rural markets.