The empirics of spatial competition: Evidence from European regions

Néstor Duch Brown

No 150, Working Papers in Economics from Universitat de Barcelona. Espai de Recerca en Economia

Abstract: The New Economic Geography literature allows detailed analysis of the factors that determine the location decisions of firms in integrated markets. However, the competitive process is modelled in a rather rudimentary way, and the empirical evidence has usually been obtained from reduced-form econometric specifications. This study describes a structural model that takes into account strategic interactions between firms. We investigate the relationship between the degree of perceived competition not only from local firms but from firms in other regions and geographic concentration. The preliminary results indicate that, in aggregate terms, local firms present stronger competition than firms in other regions. Moreover, it is confirmed that greater geographical concentration of production reduces market power, due to the intensification of local competition; however, its impact on production costs is unclear.

JEL-codes: F15 L11 L22 L23 L60 R15 R32 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2006
New Economics Papers: this item is included in nep-com, nep-cse, nep-geo, nep-mic and nep-ure
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Journal Article: The empirics of spatial competition: evidence from european regions (2007)
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