Going the distance: CS11-0019/394E-PDF

estimating the effect of provincial borders on trade when geography matters /

“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. To resolve this problem, new sub-provincial trade flows developed from a set of transaction-level transportation files are used to estimate provincial border effects. The sensitivity of the results to distance is captured by estimating models across standard geographies of varying size (provinces, economic regions, census divisions) and non-standard geographies (hexagonal lattices) of differing size and placement via a series of simulations. The results show that provincial border effects diminish as distance is measured more accurately and geographies are more fine-grained and uniform in shape and size. Nonetheless, border effects persist, with an implied ad valorem tariff equivalent of 6.9%. This contrasts with the United States, where state border effects are eliminated when similar approaches are applied"--Abstract, p. 5.

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Department/Agency Statistics Canada. Analytical Studies Branch.
Title Going the distance
Subtitle estimating the effect of provincial borders on trade when geography matters /
Series Title Analytical Studies Branch research paper series,
Publication Type Series - View Master Record
Language [English]
Other Language Editions [French]
Format Electronic
Electronic Document

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Note Issued also in French under title: Parcourir tout le trajet : estimer l’effet des frontières provinciales sur le commerce lorsque l’unité géographique compte. "September 2017."
Date 2017.
Number of Pages 44 p. :
ISBN 978-0-660-08915-7
Catalogue Number
  • CS11-0019/394E-PDF
Departmental Catalogue Number 11F0019M, no. 394
Subject Terms Domestic trade, Geography, Statistical analysis