Factor Price Equalization in the UK?
Andrew B. Bernard
Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)
Stephen J. Redding
Princeton University; London School of Economics (LSE); Centre for Economic Policy Research (CEPR)
Peter K. Schott
Yale University - School of Management; National Bureau of Economic Research (NBER)
CMPO; Institute for Fiscal Studies (IFS)
Tuck School of Business Working Paper No. 02-15; Yale SOM Working Paper No. ES-20
This paper develops a general test of factor price equalization that is robust to unobserved regional productivity differences, unobserved region-industry factor quality differences and variation in production technology across industries. We test relative factor price equalization across regions of the UK. Although the UK is small and densely-populated, we find evidence of statistically significant and economically important departures from relative factor price equalization. Our estimates suggest three distinct relative factor price areas with a clear spatial structure. We explore explanations for these findings, including multiple cones of diversification, region-industry technology differences, agglomeration and increasing returns to scale.
Number of Pages in PDF File: 44
Keywords: Relative Factor Prices, Diversification Cones, Technology, Economic Geography
JEL Classification: F11, F14, C14, J30working papers series
Date posted: June 21, 2002
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo7 in 0.579 seconds