Centrality Bias in Inter-city Trade

Tomoya Mori and Jens Wrona ()
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Jens Wrona: University of Duisburg-Essen, Mercator School of Management

No 1056, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: Large cities with central location excessively export to smaller cities in close proximity. Using Japanese inter-city trade data, we identify a substantial centrality bias: Exports from central places to their hinterland are 40%-100% larger than predicted by gravity forces. This upward bias stems from aggregating industries, which are hierarchically distributed across large and small cities. Decomposing the centrality bias along the margins of our data, we identify the extensive industry margin as the main driver behind this aggregation bias. Relying on a theory-consistent decomposition of the aggregate gravity equation, we also sort out the underlying theoretical channels that are responsible for the manifestation of the centrality bias.

Keywords: Inter-city trade; central place theory; gravity equation; aggregation bias (search for similar items in EconPapers)
JEL-codes: C43 F10 F12 F14 R12 (search for similar items in EconPapers)
Pages: 53pages
Date: 2021-02
New Economics Papers: this item is included in nep-geo and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://www.kier.kyoto-u.ac.jp/DP/DP1056.pdf (application/pdf)

Related works:
Working Paper: Centrality Bias in Inter-City Trade (2023)
Working Paper: Centrality Bias in Inter-city Trade (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:kyo:wpaper:1056

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