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Integration, Specialization, and the Adjustment

  • Paul Krugman
  • Anthony Venables

In the United States, many industries have a Silicon Valley-type geographic localization. In Europe, these same industries often have four or more major centers of production. This difference is presumably the result of the formal and informal trade barriers that have divided the European market. With the growing integration of that market, however, there is the possibility that Europe will develop an American-style economic geography. This paper uses a theoretical model of industrial localization to demonstrate this possibility, and to show the possible transition costs associated with this shift.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4559.

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Date of creation: Dec 1993
Date of revision:
Publication status: published as European Economic Review, Vol. 40, nos. 3-5 (April 1996): 959-967.
Handle: RePEc:nbr:nberwo:4559
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  1. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
  2. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
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