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Dresden Discussion Paper Series in Economics, Faculty of Business and Economics, TU Dresden >
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http://hdl.handle.net/10419/39794
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| Title: | | Spatial allocation of capital: The role of risk preferences  |
| Authors: | | Broll, Udo Roldán-Ponce, Antonio Wahl, Jack E. |
| Issue Date: | | 2010 |
| Series/Report no.: | | Dresden discussion paper series in economics 03/10 |
| Abstract: | | This paper considers a model of spatial allocation of investment capital under uncertainty. We demonstrate that the spatial concentration of economic activity depends upon properties of risk preferences deeper than risk aversion. The degree of so-called relative prudence unambiguously decides whether or not the diversi cation of income risk favours the geographic dispersion of economic activity. In our framework we relate risk diversi cation with economic integration. Then there exists risk preferences so that spatial concentration of industry and capital is not a ected by the degree of economic integration or segmentation of the regions. We also study the impact of net return regressibility upon spatial allocation. |
| Subjects: | | spatial allocation inter-regional disparity risk aversion prudence regression |
| JEL: | | D81 R12 R30 R38 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Dresden Discussion Paper Series in Economics, Faculty of Business and Economics, TU Dresden
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