Intranational home bias in trade

A number of recent studies have found intranational trade to be excessive c ompared to international trade, based on a gravity specification. The prefe rred explanation for this finding has been the presence of formal and infor mal trade barriers, with associated welfare consequences. If such barriers were indeed the sole culprit, home bias should not exist on the subnational level. We find, however, that home bias is present within U.S. states, sug gesting the presence of other causes of excessive home trade.