Factor price equalization in the UK?

Bernard, Andrew B., Redding, Stephen, Schott, Peter K. and Simpson, Helen (2002) Factor price equalization in the UK? . London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

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.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://cep.lse.ac.uk/
Additional Information:	© 2002 A. B. Bernard, S. Redding, P. K. Schott and H. Simpson
Divisions:	Centre for Economic Performance Economics
Subjects:	H Social Sciences > HB Economic Theory
JEL classification:	F - International Economics > F1 - Trade > F14 - Country and Industry Studies of Trade C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods: General > C14 - Semiparametric and Nonparametric Methods
Date Deposited:	05 Mar 2008 10:09
Last Modified:	11 Dec 2024 18:33
URI:	http://eprints.lse.ac.uk/id/eprint/3704

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