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Title:Footloose capital, market access, and the geography of regional state aid PDF Logo
Authors:Ottaviano, Gianmarco I. P.
Issue Date:2001
Series/Report no.:HWWA Discussion Paper 132
Abstract:The global welfare implications of home market effects in trade models with imperfect competition are little understood. This paper proposes a simple model in which such implications can be easily analyzed. It shows an overall tendency of imperfectly competitive sectors to inefficiently cluster in locations that offer market access advantages. The more so the stronger the market power of firms as well as the intensity of increasing returns to scale and the lower the trade costs. As such features are likely to differ widely across sectors, those results provide theoretical ground to the promotion of regional policies that are also sectorspecific and not only region-specific as currently in the EU.
Subjects:economic integration
specialization
home market effect
regional disparities
regional policy
JEL:F12
R13
L13
Document Type:Working Paper
Appears in Collections:HWWA Discussion Paper, Hamburgisches Welt-Wirtschafts-Archiv

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