Bernard, Andrew B., Redding, Stephen, 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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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)|
|Additional Information:||© 2002 A. B. Bernard, S. Redding, P. K. Schott and H. Simpson|
|Uncontrolled Keywords:||elative Factor Prices, Diversification Cones, Technology, Economic Geography|
|Library of Congress subject classification:||H Social Sciences > HB Economic Theory|
|Journal of Economic Literature Classification System:||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
|Sets:||Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Departments > Economics
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