Abstract
Using a microlevel data set of wind turbine installations in Denmark and Germany, we estimate a structural oligopoly model with cross-border trade and heterogeneous firms. Our approach separately identifies border-related from distance-related variable costs and bounds the fixed cost of exporting for each firm. In the data, firms' market shares drop precipitously at the border. We find that 40% to 50% of the gap can be attributed to national border costs. Counterfactual analysis indicates that eliminating national border frictions would increase total welfare in the wind turbine industry by 4% in Denmark and 6% in Germany.
Original language | English (US) |
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Pages (from-to) | 623-637 |
Number of pages | 15 |
Journal | Review of Economics and Statistics |
Volume | 97 |
Issue number | 3 |
DOIs | |
State | Published - Jul 1 2015 |
All Science Journal Classification (ASJC) codes
- Social Sciences (miscellaneous)
- Economics and Econometrics