Interregional trade and economic integration. A partial equilibrium analysis

Abstract

The classical comparative static analysis of economic integration is extended to a spatial world by the theory of partial spatial price equilibrium. It is made operational by gravity-like specifications of the demand functions and is applied to a quantitative study of regional effects of the EEC and EFTA formation in Scandinavia and the FRG. Aggregated effects of integration on regional output are presented, based on a hypothetical pre-integration versus post-integration comparison for 1970. It is shown that, contrary to the common views, European economic integration has not been generally detrimental to geographically peripheral areas. © 1988.