In the last ten years the space issue, i.e. the study of the role played by space in economic phenomena, has attracted a lot of interest from many economic fields. The combination of increasing returns, market imperfections, and trade costs creates forces that, together with factor endowments, determine the distribution of economic activities. The aim of this work is to estimate a model of economic geography, using a space-time panel data on Italian provinces, in order to both test the empirical relevance of this theory, and try to give a measure of the geographic extent of spatial externalities. Particular attention has been devoted to address rigorously those endogeneity issues that naturally arises when dealing with both structural models and spatial data. Our results are consistent with the hypothesis that product-market linkages actually influence the geographic concentration of economic activities and that their spread over space is, contrary to previous findings, not negligible. --
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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number
03-38.
Find related papers by JEL classification: R32 - Urban, Rural, and Regional Economics - - Production Analysis and Firm Location - - - Other Production and Pricing Analysis F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
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Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.) This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.