Economies of Scale in European Manufacturing Revisited

Espen R. Henriksen, Frode Steen and Ulltveit-Moe, Karen-Helene

No 2896, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We test for internal and external economies of scale in European manufacturing, employing a more disaggregated data set than has been used in earlier analyses. We aim to separate externalities from common business cycle effects. Fifteen European manufacturing industries in Germany, France, the UK and Italy are analysed. We focus on economies of scale at three levels: the national industry, the national industrial cluster and the transnational industry. Our results suggest that external economies of scale arising from inter-industry external effects and cross-country effects are less prevalent than increasing returns at the level of the industry and firm. Our results underscore the importance of the level of disaggregation in studies of internal and external economies of scale and argue that the external effects are highly country and industry specific.

Keywords: clusters; internal and external economies of scale; new economic geography (search for similar items in EconPapers)
JEL-codes: C33 D24 O47 R12 (search for similar items in EconPapers)
Date: 2001-07
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