Rikard Forslid: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden
Abstract: Many countries devote a large part of their national budget to regional policy. This paper analyses the interaction of economic integration and some typical regional policies in a new economic geography model with three regions of different size. The policies analysed are the relocation of government activities, infrastructure investment and subsidies to the establishment of industry. It is shown how regional policy can easily be misdirected.
17 pages, June 1, 2003
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