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How Britain Unified Germany: Trade Routes and the Formation of the Zollverein

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  • Wolf, Nikolaus
  • Huning, Thilo

Abstract

If trade costs vary with trade routes, the location of a state can shape its bargaining power. To show this, we study an exogenous change in Prussian borders 1815 following a British intervention. This led to the formation of the Zollverein, the first customs union in history. We document how trade routes mattered for the decision of states to join a customs union. We present a model featuring tariffs that depend on location. Calibrated to historical data the model replicates sequence of historical decisions. With counterfactual borders absent Britain's intervention, the Zollverein would not have been formed.

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  • Wolf, Nikolaus & Huning, Thilo, 2019. "How Britain Unified Germany: Trade Routes and the Formation of the Zollverein," CEPR Discussion Papers 13634, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:13634
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    Cited by:

    1. Albers, Hakon & Pfister, Ulrich, 2023. "State formation and market integration: Germany, 1780–1830," Journal of Comparative Economics, Elsevier, vol. 51(2), pages 403-421.
    2. Thilo R. Huning & Fabian Wahl, 2016. "You Reap What You Know: Observability of Soil Quality, and Political Fragmentation," Working Papers 0101, European Historical Economics Society (EHES).
    3. Dohmen, Martin, 2022. "Freedom of enterprise and economic development in the German industrial take-off," European Economic Review, Elsevier, vol. 148(C).

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    More about this item

    Keywords

    Trade;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • N73 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Europe: Pre-1913
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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