Abstract
Abstract This paper exploits spatial quasi-experimental variation around French departmental borders to provide novel evidence that regional borders disturb surrounding economic activity; namely, commuting flows, catchment areas, and residential density. The lack of integration of local transport networks at regional borders – leading to a 4.5km travel distance penalty when crossing borders – explains the observed border effects. Using a spatial quantifiable equilibrium framework and accounting for construction costs, a policy simulation exercise shows that integrating local transport networks leads to a 6.36% average growth in real per capita residential income.
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