Market Potential and Border Effects in Europe

Peter Huber, Michael Paffermayr and Yvonne Wolfmayr
Authors registered in the RePEc Author Service: Michael Pfaffermayr

ERSA conference papers from European Regional Science Association

Abstract: We estimate a linear approximation of the market potential function for Europe as derived in geography and trade models. Using a spatial econometric estimation approach, border effects are identified by a differential impact of nearby regions' purchasing power, depending on whether two regions are located within the EU15 or outside the EU15. Our results reveal substantial market potential effects on nominal wage rates. We also find significant border effects between EU15 and non-EU15 countries. Our estimation results suggest that the enlargement of the EU in May 2004 may lead to pronounced wage effects in the new member states, but to relatively small ones for the existing members and that regional disparities within new member states will increase.

Date: 2006-08
New Economics Papers: this item is included in nep-geo, nep-int and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Market Potential and Border Effects in Europe (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:wiw:wiwrsa:ersa06p469

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