Citation

Discussion Paper Details

Please find the details for DP6345 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: History and Industry Location: Evidence from German Airports

Author(s): Stephen J. Redding, Daniel M Sturm and Nikolaus Wolf

Publication Date: June 2007

Keyword(s): Economic Geography, German Division, German Reunification and Industry Location

Programme Area(s): International Trade and Regional Economics

Abstract: A central prediction of a large class of theoretical models is that industry location is not necessarily uniquely determined by fundamentals. In these models, historical accident or expectations determine which of several steady-state locations is selected. Despite the theoretical prominence of these ideas, there is surprisingly little systematic evidence on their empirical relevance. This paper exploits the combination of the division of Germany after the Second World War and the reunification of East and West Germany as an exogenous shock to industry location. We focus on a particular economic activity and establish that division caused a shift of Germany's air hub from Berlin to Frankfurt and there is no evidence of a return of the air hub to Berlin after reunification. We develop a body of evidence that the relocation of the air hub is not driven by a change in economic fundamentals but is instead a shift between multiple steady-states.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6345

Bibliographic Reference

Redding, S, Sturm, D and Wolf, N. 2007. 'History and Industry Location: Evidence from German Airports'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6345