Footloose Capital, Market Access, and the Geography of Regional State Aid

Gianmarco Ottaviano

No 155, Development Working Papers from Centro Studi Luca d'Agliano, University of Milano

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 di¤er widely across sectors, those results provide theoretical ground to the promotion of regional policies that are also sector-specific and not only region-specific as currently in the EU.

Keywords: economic integration; specialization; home market effect; regional disparities; regional policy (search for similar items in EconPapers)
JEL-codes: F12 L13 R13 (search for similar items in EconPapers)
Date: 2001-05-01
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Citations: View citations in EconPapers (4)

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Related works:
Chapter: Footloose capital, market access and the geography of regional state aid (2004)
Working Paper: Footloose Capital, Market Access, and the Geography of Regional State Aid (2001)
Working Paper: Footloose capital, market access, and the geography of regional state aid (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:csl:devewp:155

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