A U-Shaped Europe? A Simulation Study of Industrial Location

Rikard Forslid, Jan I. Haaland and Karen Helene Ulltveit-Moe

No 2247, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper uses a full-scale CGE-model - calibrated on 1992 data - to investigate the effects of European integration on the location of industrial production. Our results reveal large differences among individual industries. Industries with high scale elasticities typically display a non-monotonous relationship between trade liberalisation and concentration, with maximal concentration for intermediate trade costs. Other industries, more driven by comparative advantage, become more and more concentrated as trade costs are lowered. On the aggregate European level we find an (inverse) U-shaped relation between trade costs and concentration, with Europe 1992 close to the peak of concentration. The results also show a close correlation between real income gains and growth in manufacturing production; we label this an "externality shifting" effect - gains from pecuniary externalities in the manufacturing sectors. Finally, we note that nominal factor prices co-vary as regions specialise, while in relative terms there are traces of the Stolper-Samelson theorem.

Keywords: Agglomeration; Economic Geography; Economic Integration (search for similar items in EconPapers)
JEL-codes: C68 F10 F12 F15 R12 (search for similar items in EconPapers)
Date: 1999-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=2247 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: A U-shaped Europe?: A simulation study of industrial location (2002)
Working Paper: A U-Shaped Europe? A Simulation Study of Industrial Location (1999)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:2247

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=2247

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().