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Preferential Trading Arrangements and Industrial Location

Diego Puga () and Anthony Venables ()

No 1309, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper considers the location effects of geographically-discriminatory trade policy. A preferential move towards a customs union attracts industry to the integrating countries. When internal barriers fall below some critical level, input-output links between imperfectly competitive firms lead some customs union countries to gain industry at the expense of others. Closer integration can bring converging industrial development to the union. A hub-and-spoke arrangement favours location in the hub, with better reciprocal access to spoke nations than to each other. Further liberalization induces agglomeration in the hub and may trigger disparities between the spokes.

Keywords: Agglomeration; Customs Union; Hub-and-spoke; Integration (search for similar items in EconPapers)
JEL-codes: F12 F15 R12 (search for similar items in EconPapers)
Date: 1995-12
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Journal Article: Preferential trading arrangements and industrial location (1997) Downloads
Working Paper: Preferential Trading Arrangements and Industrial Location (1995) Downloads
Working Paper: Preferential trading arrangements and industrial location (1995) Downloads
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