Borders, geography, and oligopoly: : Evidence from the wind turbine industry

• Autores: A. Kerem Coşar, Paul L. E. Grieco, Felix Tintelnot
• Localización: The Review of economics and statistics, ISSN 0034-6535, Vol. 97, Nº 3, 2015, págs. 623-637
• Idioma: inglés
• DOI: 10.1162/rest_a_00485
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• Resumen

  • 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