Extending Krugman's (1991) economic geography model, this paper examines the stability of an industrial structure resulting from the production shifing-in effect of the formation of regional trade agreemnets. This paper claims that non-higher external...
Extending Krugman's (1991) economic geography model, this paper examines the stability of an industrial structure resulting from the production shifing-in effect of the formation of regional trade agreemnets. This paper claims that non-higher external trade costs against non-member countries may be needed in order to secure the divergence of industries into the area of a regional trade agreement.