Politicians' Opinions on Rivals in the Competition for Firms: An Empirical Analysis of Reference Points Near a Border

34 Pages Posted: 24 Mar 2011

See all articles by Benny Geys

Benny Geys

Vrije Universiteit Brussel (VUB)

Steffen Osterloh

Center for European Economic Research (ZEW)

Date Written: March 20, 2011

Abstract

Studies of spatial policy interdependence in (local) public policies usually concentrate on the relations between jurisdictions within a single analysed region, and disregard possible extra-regional effects. This paper evaluates the validity of such restriction by studying German local politicians’ assessments of their jurisdictions’ main competitors in the struggle to attract firms. We find that location near a border significantly undermines politicians’ perception that the fiercest competitive pressure derives from jurisdictions within their own state. This effect sets in about 20km (12.5km) from a national (international) border. We also confirm that intranational borders are perceived as much less constraining for firms than international ones, even in a highly integrated area such as the European Union. Overall, these results indicate that nearest municipalities perceive each other as competitors regardless of the state or country where they are located. The practical implications of these findings for future studies on spatial policy interdependence are discussed.

Keywords: Government interaction, competition, border effects, policy interdependence

JEL Classification: D24, D60, H71, H72

Suggested Citation

Geys, Benny and Osterloh, Steffen, Politicians' Opinions on Rivals in the Competition for Firms: An Empirical Analysis of Reference Points Near a Border (March 20, 2011). ZEW - Centre for European Economic Research Discussion Paper No. 11-020, Available at SSRN: https://ssrn.com/abstract=1793212 or http://dx.doi.org/10.2139/ssrn.1793212

Benny Geys

Vrije Universiteit Brussel (VUB) ( email )

Pleinlaan 2
http://www.vub.ac.be/
Brussels, 1050
Belgium

Steffen Osterloh (Contact Author)

Center for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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