DP428 Portuguese Industry and the Effect of EC Membership

Author(s): Cristina Corado
Publication Date: July 1990
Keyword(s): Industrial Location, Portugal, Spain, Trade Liberalization
JEL(s): 121, 420, 423
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=428

This paper uses a formal model of imperfect competition to determine the effects on eight industries of EC enlargement and the `completion of the market' in 1992. Six of the industries are characterized by oligopolistic market structures, economies of scale, and have been heavily protected from international competition in Portugal and Spain. The `costs of non-Europe' for each industry are assessed from the difference in welfare calculated when all EC countries reduce protection costs; and when only the Iberian countries reduce protection. The `costs of non-Europe' are generally positive, although `1992' is likely to reduce production and lead to pressures for industrial reallocation in favour of the larger economies and more efficient scale of production.