This paper exploits the division of Germany after the Second World War and the reunification of East and West Germany in 1990 as a natural experiment to provide evidence of the importance of market access for economic development. In line with a standard new economic geography model, we find that following division cities in West Germany that were close to the new border between East and West Germany experienced a substantial decline in population growth relative to other West German cities. We provide several pieces of evidence that the decline of the border cities can be entirely accounted for by their loss in market access and is neither driven by differences in industrial structure nor differences in the degree of war related destruction. Finally, we also find some first evidence of a recovery of the border cities after the re-unification of East and West Germany.Keywords: Market Access, Economic Geography, German Division, German Reunification JEL classification: F15, N94, O18 * Redding gratefully acknowledges financial support from a Philip Leverhulme Prize. We would like to thank Sascha Becker, Tim Besley, Theo Eicher, Keith Head, Peter Neary, Volker Nitsch, Henry Overman, Steve Pischke, Albrecht Ritschl, Frederic Robert-Nicoud, Alaric Searle, Tony Venables, Niko Wolf, as well as conference and seminar participants for helpful comments. We are also very grateful to Alexander Knapp, Mirabelle Muuls, Ralph Ossa and Marco Schonborn for excellent research assistance. The usual disclaimer applies.

S.1. INTRODUCTION THIS SUPPLEMENT CONTAINS DETAILED DERIVATIONS and supplementary material for the paper. A separate Technical Data Appendix, located together with the replication data and code, collects together additional empirical results and robustness tests.Section S.2 of this supplement presents a more detailed analysis of the theoretical model. We report the technical derivations of the expressions reported in the paper. We also establish a number of results about the properties of the general equilibrium with exogenous location characteristics and endogenous agglomeration forces. Section S.3 calibrates the model for known parameter values and shows that there is a one-to-one mapping from these known parameters and the observed data to unobserved location characteristics. Therefore, these unobserved location characteristics correspond to structural residuals that are functions of the parameters and the observed data.Section S.4 turns to the structural estimation of the model, where both the parameters and unobserved location characteristics are unknown and to be estimated. We derive the moment conditions used in the estimation and review the Generalized Method of Moments (GMM) estimator as applied to our setting. We discuss the computational algorithms used to estimate the model and report the results of a grid search over the parameter space that we use to characterize the properties of the GMM objective function. Section S.5 uses the model to undertake counterfactuals for the effects of division and reunification. Section S.6 contains further information about the data sources and definitions. S.2. THEORETICAL MODELIn this section, we develop in further detail the theoretical model outlined in the paper. We present the complete technical derivations for all the expressions and results reported in the paper. In the interests of clarity and to ensure that this section of the supplement is self-contained, we reproduce some material from the paper, but also include the intermediate steps for the derivation of expressions.We consider a city embedded within a wider economy. The city consists of a set of discrete locations or blocks, which are indexed by i = 1 S. The city is

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