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The Political Economy of Regional Integration Projects at Borders where Rich and Poor Meet: The Role of Cross-Border Shopping and Community Sorting

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  • Kristof Dascher
  • Alexander Haupt

Abstract

At borders where rich and poor countries meet, services prices differ hugely. In principle, price differentials could be exploited to mutual benefit, offering improved job opportunities to the poor as well as better shopping opportunities to the rich. However, cross-border shopping is often limited by the substantial transaction costs of crossing the border. Moreover, local governments frequently fail to cut these transaction costs even where they have the opportunity to do so. In this paper, we show (i) why a majority of the local electorate often backs this outcome, (ii) how intra-country mobility affects local policy, and (iii) how (inter-) national regulations shape local decisions.

Suggested Citation

  • Kristof Dascher & Alexander Haupt, 2008. "The Political Economy of Regional Integration Projects at Borders where Rich and Poor Meet: The Role of Cross-Border Shopping and Community Sorting," CESifo Working Paper Series 2280, CESifo.
    • Handle: RePEc:ces:ceswps:_2280
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    References listed on IDEAS

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    Cited by:

    1. Dascher, Kristof & Haupt, Alexander, 2011. "The political economy of regional integration projects at borders where poor and rich meet: The role of cross-border shopping and community sorting," Journal of Urban Economics, Elsevier, vol. 69(1), pages 148-164, January.
    2. Kristof Dascher, 2011. "Beggar Thy Neighbour?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 12(2), pages 132-150, May.
    3. Sklias, Pantelis & Tsampra, Maria, 2012. "Towards an analytical framework of regional integration in Western Balkans," MPRA Paper 36504, University Library of Munich, Germany.
    4. Pantelis Sklias, 2011. "The political economy of regional integration in the Western Balkans," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 4(3), pages 21-37, December.

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    More about this item

    Keywords

    cross-border shopping; community sorting; regional integration; voting; federalism;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • F15 - International Economics - - Trade - - - Economic Integration
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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