Integration, geography and the burden of history
نویسنده
چکیده
This paper develops a simple two-region two-sector general equilibrium model of trade and migration where one monopolistically competitive sector generates local pecuniary externalities. The aim is to gain insight on the question whether economic integration can be expected to increase the differences in industrial structure between more and less developed regions. It is shown that a reduction in trade and/or migration costs weakens the lock-in effect of historical events while strengthening the role of expectations. J.E.L.: F12, F13, R1 * MAILING ADDRESS: Gianmarco I.P. Ottaviano, Università degli Studi di Bologna, Dipartimento di Scienze Economiche, Piazza Scaravilli 2, 40126 Bologna, Italy. Tel. +39-51258666. Fax. +39-51-221968. E-mail. [email protected].
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