اثر بازار خانه در مقابل اثر بازار رأی : تعادل محل سکونت در یک مدل رای گیری احتمالاتی

This paper considers the location of manufacturing activities when regional policies are endogenous. We find that once the political economy of regional policy is explicitly taken into account, regional population size has an ambiguous effect on the level of regional subsidy, even though it plays a key role in determining the equilibrium spatial allocation of industry. In particular, the final allocation of firms depends both on the relative economic strengths of the two regions, as predicted by more orthodox economic geography models, as well as by their relative political strengths.

The de-location process associated with trade integration has been a major concern for European policy makers for decades. It is reflected, for instance, in the quadrupling of cohesion spending as a share of the EU budget since 1986, and in the important level of spending by member states on their disadvantaged regions such Germany's Eastern Länder and Italy's Mezzogiorno. Much of this spending is explicitly aimed at preventing, delaying or even reversing the agglomeration of economic activity in favoured regions. The aim of the present paper is to address the issue of agglomeration during a process of regional integration in a framework where regional policy is determined by political economy forces. More precisely, taking a laissez-faire equilibrium as a benchmark, we show how politics and economic integration interact in both directions to speed up or slow down the agglomeration process that results from integration.

In the late 1950s, the per-capita income gap between Belgium's main regions, Flanders and Wallony, was particularly wide.24 Flanders was behind and it was widely expected that it would take it more than 20 years to close the gap. In fact, it took only 6 years for Flanders’ per capita income to reach the level of Wallony. What happened? Early in the 1960s, the ‘Loi d'expansion régionale’ (literally, the ‘law of regional expansion’) entered into force. This law was designed to attract investment, mainly to Flanders. Some of this investment was clearly diverted from Wallony, and the law had the effect of accelerating the catch-up process. But why did this law get passed in the first place? The explanation put forth by our model focuses on the difference in the political environments prevailing in the two regions. Wallony was deeply divided politically with a very conservative right, a strong left-wing party, and a tense class struggle. By contrast, the political parties and the unions in Flanders were more moderate. Moreover, Wallony experienced an influx of immigrants and, consequently, its society was more heterogeneous and variegated than the Flemish society. These differences still remain today, and now it is Wallony that is behind.