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Market Potential and Border Effects in Europe

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Author Info

  • Michael Pfaffermayr

    (WIFO)

  • Peter Huber

    (WIFO)

  • Yvonne Wolfmayr

    (WIFO)

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.

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Paper provided by WIFO in its series WIFO Working Papers with number 235.

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Date of creation: 15 Nov 2004
Date of revision:
Handle: RePEc:wfo:wpaper:y:2004:i:235

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Related research

Keywords: Market Potential; Border Effects; Spatial Econometrics;

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References

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  1. Mion, Giordano, 2004. "Spatial externalities and empirical analysis: the case of Italy," Journal of Urban Economics, Elsevier, vol. 56(1), pages 97-118, July.
  2. Krugman, Paul & Elizondo, Raul Livas, 1996. "Trade policy and the Third World metropolis," Journal of Development Economics, Elsevier, vol. 49(1), pages 137-150, April.
  3. Crozet, Matthieu & Brülhart, Marius & Koenig, Pamina, 2004. "Enlargement and the EU Periphery : The Impact of Changing Market Potential," HWWA Discussion Papers 270, Hamburg Institute of International Economics (HWWA).
  4. Annekatrin Niebuhr, 2008. "The impact of EU enlargement on European border regions," International Journal of Public Policy, Inderscience Enterprises Ltd, vol. 3(3/4), pages 163-186.
  5. H. Hanson, Gordon, 2005. "Market potential, increasing returns and geographic concentration," Journal of International Economics, Elsevier, vol. 67(1), pages 1-24, September.
  6. Brakman, Steven & Garretsen, Harry & Schramm, Marc, 2001. "New economic geography in Germany: testing the Helpman-Hanson model," Research Report 01D46, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
  7. Decressin, Jörg & Fatás, Antonio, 1994. "Regional Labour Market Dynamics in Europe," CEPR Discussion Papers 1085, C.E.P.R. Discussion Papers.
  8. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June.
  9. H Garretsen & M. Schramm & S. Brakman, 2003. "The Strategic Bombing of German Cities during World War II and its Impact for Germany," Working Papers 03-08, Utrecht School of Economics.
  10. H. Kelejian, Harry & Prucha, Ingmar R., 2001. "On the asymptotic distribution of the Moran I test statistic with applications," Journal of Econometrics, Elsevier, vol. 104(2), pages 219-257, September.
  11. Patrick A. Puhani, 2001. "Labour Mobility: An Adjustment Mechanism in Euroland? Empirical Evidence for Western Germany, France and Italy," German Economic Review, Verein für Socialpolitik, vol. 2(2), pages 127-140, 05.
  12. repec:hal:cesptp:halshs-00096285 is not listed on IDEAS
  13. Combes, Pierre-Philippe & Lafourcade, Miren, 2001. "Transport Cost Decline and Regional Inequalities: Evidence from France," CEPR Discussion Papers 2894, C.E.P.R. Discussion Papers.
  14. Annekatrin Niebuhr, 2006. "Market access and regional disparities," The Annals of Regional Science, Springer, vol. 40(2), pages 313-334, June.
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Citations

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Cited by:
  1. Annekatrin Niebuhr, 2005. "The Impact of EU Enlargement on European Border Regions," ERSA conference papers ersa05p114, European Regional Science Association.
  2. Niebuhr, Annekatrin & Schlitte, Friso, 2008. "EU enlargement and convergence: Does market access matter?," HWWI Research Papers 1-16, Hamburg Institute of International Economics (HWWI).
  3. Maria Florencia Granato, 2011. "REGIONAL NEW ECONOMIC GEOGRAPHY (refereed paper)," ERSA conference papers ersa10p747, European Regional Science Association.

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