Regional income differences and market accessibility in the enlarged European Union: a simultaneous spatial CGE and estimation approach

This dissertation examines the key prediction of trade models à la Dixit-Stiglitz for the EU-27. Precisely, we test if regional market accessibility determines regional income differences in the enlarged European Union. We propose an empirical strategy that overcomes weaknesses of existing studies and solves the problem of data shortage for Europe. This is achieved by combining econometric tools with a computable general equilibrium model. Calibrated interregional trade flows among European regions are used to calculate regional price indices. The latter measure regional market accessibility and are implemented in the econometric analysis. Relying on a highly disaggregated regional system we prove that good market accessibility has a positive impact on a region’s income level.


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