Sectorial Border Effects in the European Single Market: An Explanation through Industrial Concentration
33 Pages Posted: 14 Nov 2009
Date Written: November 11, 2009
Abstract
The purpose of this paper is to explain the relation between the Border Effect and industrial concentration. This is achieved by founding this relation on the Home Market Effect and testing the robustness of this foundation through an application to the European Single Market. A sectorial Gravity Equation is estimated using different econometric estimators, in particular we discuss a recently suggested technique for the estimation of log-linear CES models. Overall, our findings suggest a steady relation between the Border Effect and industrial concentration. Besides, the analysis of industrial concentration through a synthetic index provides us with valuable insights into the structure of the European industry.
Keywords: Trade, Border Effect, Industrial Concentration, Home Market Effect, European Single Market
JEL Classification: F1, F12, F15
Suggested Citation: Suggested Citation