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Location equilibrium with endogenous rent seeking
Stockholm University, Faculty of Social Sciences, Department of Economics.
2009 (English)In: Journal of Economic Geography, ISSN 1468-2702, E-ISSN 1468-2710, Vol. 9, no 6, 869-887 p.Article in journal (Refereed) Published
Abstract [en]

This article analyzes the location of manufacturing activities when regional policy is determined by endogenous rent seeking. Once lobbying for government transfers to regions is included in an economic geography framework with size asymmetries, the standard prediction that the larger region becomes the core when trade barriers are reduced no longer holds. The establishment of manufacturing production in the economically smaller region is increasing in the level of regional integration once trade becomes freer than a certain threshold value. When free trade prevails, the relocation of industry takes place up to the point where there are as many firms operating in the South as in the North. Furthermore, lobbying slows down the agglomeration process, whereas the home market magnification effect [Krugman (1991, Journal of Political Economy, 99, 483-499)] becomes weaker.

Place, publisher, year, edition, pages
2009. Vol. 9, no 6, 869-887 p.
Keyword [en]
economic geography, regional policy, political economy, rent seeking
National Category
URN: urn:nbn:se:su:diva-59653DOI: 10.1093/jeg/lbp011ISI: 000271108700006OAI: diva2:432250
authorCount :1Available from: 2011-08-02 Created: 2011-07-05 Last updated: 2011-08-02Bibliographically approved

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