IDEAS home Printed from https://ideas.repec.org/p/cep/cepdps/dp0225.html
   My bibliography  Save this paper

Economic Integration

Author

Listed:
  • Mary Amiti

Abstract

This paper considers the effect of economic integration on the industrial structure and trade patterns of two countries which differ only in size. In a general equilibrium model of intra-industry trade, each country has two imperfectly competitive industries which can differ in three respects: relative factor intensities, level of transport costs and demand elasticities. With positive transport costs and increasing returns to scale, each firm prefers to locate in the larger country due to the 'market access' effect. But the increase in demand for factors in the large country induces a rise in relative wages to maintain factor market equilibrium. The tension between the market access effect and production cost effect determines which industry will concentrate in which country. We show that economic integration leads to some degree of specialisation, with the large country becoming a net exporter in goods which are relatively intensive in the mobile factor, capital; goods which are subject to relatively higher transport costs; and a changing pattern of net exports when demand elasticities differ.

Suggested Citation

  • Mary Amiti, 1995. "Economic Integration," CEP Discussion Papers dp0225, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp0225
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cep:cepdps:dp0225. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://cep.lse.ac.uk/_new/publications/discussion-papers/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.