The Role of Regional Competition for Demography and Regional Disparities in Germany

Romanian Journal of Regional Science, Vol. 1, No. 1, pp. 45-70, Winter 2007

Posted: 6 Sep 2008

See all articles by Florian W. Bartholomae

Florian W. Bartholomae

Munich Business School; University of the German Federal Armed Forces - Universität der Bundeswehr München

Alina M. Popescu

University of the German Federal Armed Forces - Universität der Bundeswehr München

Date Written: December 1, 2007

Abstract

The demographic development in Germany has severe consequences on the economic and social development of the country. The aging and decreasing of the population are certainly the most considered aspects of the demographic change. We consider additionally the competition between regions for inhabitants, which can be observed in Germany and aggravates the country's demographic situation. Indicators such as the natural population development, the fertility rate, the sex ratio, the migration, etc. are varying significantly from region to region. Very strong regional differences in these indicators are observable between East and West Germany, as well as between North and South Germany. High-qualified persons are recruited by other regions for the purpose to built higher location advantages. This intensified competition leads to very big regional differences that some regions cannot successfully face. The consideration, that a cooperation of regions instead their competition would yield success regarding the demographic problem, which is stronger through the national migration, is very important. We consider in our model two utility-maximizing German regions that pursue a policy of attracting young inhabitants through different policy measures. Therefore, we construct an oligopoly model that picture the competition situation. A Prisoner's dilemma results, where each region has the incentive to attract inhabitants from the other region, despite that cooperation between both regions would lead to higher welfare, better allocation of the factors and less government spending.

Keywords: demographic development, regional competition, regional disparities, Germany, prisoner's dilemma

JEL Classification: J11, R23, R58

Suggested Citation

Bartholomae, Florian W. and Popescu, Alina M., The Role of Regional Competition for Demography and Regional Disparities in Germany (December 1, 2007). Romanian Journal of Regional Science, Vol. 1, No. 1, pp. 45-70, Winter 2007, Available at SSRN: https://ssrn.com/abstract=1263779

Florian W. Bartholomae (Contact Author)

Munich Business School ( email )

Elsenheimerstraße 61
Munich, Bavaria 80687
Germany

University of the German Federal Armed Forces - Universität der Bundeswehr München ( email )

Werner-Heisenberg-Weg 39
Neubiberg
Munich, 85579
Germany

Alina M. Popescu

University of the German Federal Armed Forces - Universität der Bundeswehr München ( email )

Werner-Heisenberg-Weg 39
Neubiberg
Munich, 85579
Germany

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