Barriers to Diversification and Regional Allocation of Capital

Udo Broll, Antonio Roldán-Ponce and Jack E. Wahl

No 14/07, Dresden Discussion Paper Series in Economics from Technische Universität Dresden, Faculty of Business and Economics, Department of Economics

Abstract: In order to evaluate the allocational effectiveness of regional policy when harmonizing regional economic conditions firms? preferences play a pivot role. If harmonization hinders risk diversification of the firm, then instead of regional diversification of capital agglomeration of capital occurs. Hence, regional policy will not achieve its objective to equal the spatial allocation of capital.

Keywords: Regional policy; agglomeration; diversification; allocation; risk aversion; prudence (search for similar items in EconPapers)
JEL-codes: R12 R30 R38 (search for similar items in EconPapers)
Date: 2007
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