Review of World Economics

, Volume 147, Issue 3, pp 543–566 | Cite as

Sectoral border effects and the geographic concentration of production

Original Paper

Abstract

The object of this paper is to study the relationship between the border effect and the geographic concentration of production. We explain this relationship through the home market effect and test the robustness of this explanation by using an analysis that considers the European single market. A sectoral gravity equation is estimated with different econometric estimators; in particular, we discuss a recently suggested estimator for log-linear CES models. Overall, our findings suggest a steady relationship between the border effect and the concentration of production. Furthermore, the analysis of concentration through a synthetic index provides us with valuable insights into the structure of the European industry.

Keywords

Trade Border effect Geographic concentration Home market effect European single market 

JEL Classification

F10 F12 F15 

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Copyright information

© Kiel Institute 2011

Authors and Affiliations

  1. 1.Economics DepartmentUniversity of CataniaCataniaItaly

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