by Piyus Panigrahi

Liberalized mobility of goods and services across regions within a country gives rise to greater integration of markets for products. This results in these products being manufactured by more productive firms using a more efficient set of inputs, thereby increasing aggregate productivity of an economy. What role does geography play in the intra-national organization of supply chains? How can one quantify the micro-level implications of reduction in geographic barriers on firm-to-firm trade within and between regions? This project attempts to answer this question by developing a framework that incorporates the role of geographic barriers in the endogenous formation of supply chains and consequences thereof. In addition, such a framework for intra-national trade allows for rigorous analysis of both aggregate and micro-level implications of policy experiments. As a proof of concept, it will then be used to study the quantitative implications of region-based tax regime changes in a federal structure of government as is the case in India.