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

Arbeitspapier

Using a micro-level dataset 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. Variable border costs are large: equivalent to roughly 400 kilometers (250 miles) in distance costs, which represents 40 to 50 percent of the average exporter's total delivery costs. Fixed costs are also important; removing them would increase German firms' market share in Denmark by 10 percentage points. Counterfactual analysis indicates that completely eliminating border frictions would increase total welfare in the wind turbine industry by 5 percent in Denmark and 10 percent in Germany.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 1228

Classification and Topics

• Classification: Wirtschaft ; Empirical Studies of Trade ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Firm Objectives, Organization, and Behavior: General ; Industry Studies: Manufacturing: General ; Size and Spatial Distributions of Regional Economic Activity
• Subject: trade costs ; oligopoly ; spatial competition ; constrained MLE ; Windenergieanlage ; Außenhandel ; Räumlicher Wettbewerb ; Oligopol ; Dänemark ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Cosar, A. Kerem ; Grieco, Paul L. E. ; Tintelnot, Felix
• Event: Veröffentlichung
• (who): Koç University-TÜSİAD Economic Research Forum (ERF)
• (where): Istanbul
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/108603
• Last update: 10.03.2025, 11:44 AM CET