Social Sciences
4 years ago

Market power drives inefficient clustering of industries, impacting regional state aid.

SSRN Electronic Journal
Footloose Capital, Market Access and the Geography of Regional State Aid
Gianmarco I.P. Ottaviano

Paper Summary

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The article discusses how industries tend to cluster in areas with good market access, leading to inefficiencies. This happens more in sectors with strong firms, high returns to scale, and low trade costs. Different sectors have different characteristics, so regional policies should be tailored to each sector, not just each region.