Borders, Geography, and Oligopoly: Evidence from the Wind Turbine Industry

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

doi:10.1162/rest_a_00485

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Borders, Geography, and Oligopoly: Evidence from the Wind Turbine Industry

A. Kerem Coşar; Paul L. E. Grieco¹; Felix Tintelnot^2,3

¹ Pennsylvania State University · ² Princeton University · ³ University of Chicago

The Review of Economics and Statistics 2015

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.

DOI: 10.1162/rest_a_00485
Volume: 97 (3)
Pages: 623-637
Language: en
Export: BibTeX
Sources: openalex crossref