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

A. Kerem Coşar, Paul L.E. Grieco, Felix Tintelnot

Research output: Contribution to journalArticlepeer-review

8 Scopus citations

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 languageEnglish (US)
Pages (from-to)623-637
Number of pages15
JournalReview of Economics and Statistics
Volume97
Issue number3
DOIs
StatePublished - Jul 1 2015

All Science Journal Classification (ASJC) codes

  • Social Sciences (miscellaneous)
  • Economics and Econometrics

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