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Factor price equalization in the UK?

Bernard, Andrew B. and Redding, Stephen and Schott, Peter K. and Simpson, Helen (2002) Factor price equalization in the UK? 547. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Identification Number: 547

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
Subjects: H Social Sciences > HB Economic Theory
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Departments > Economics
Date Deposited: 05 Mar 2008 10:09
Last Modified: 01 Oct 2010 08:50
URI: http://eprints.lse.ac.uk/id/eprint/3704

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