Borders have a sizable negative impact on trade flows. Given the vast number of individual goods potentially traded, this border effect could have two possible explanations: (1) less international than domestic trade in the goods that are actually traded between countries (flow), or (2)...

With quot;home bias,quot; a consumer differentiates between domestic goods and imports and tends to purchase the domestic variety. A vast number of empirical studies in the international trade literature report the apparent prevalence of a large degree of home bias (the case of the missing...