Chapter 11

The State Competitive Environment: Integration and Convergence


The discussion presented here suggests two types of equilibrium conditions. One is the overall equilibrium for the mobile factors. Although determined by the sum of the demand and supply in each of the individual localities, mobility insures that the price is the same in each and every locality and thus has the same qualitative output response. The disturbances to the mobile factor equilibrium conditions induce a common effect across the different economies. This is truly a case analogous to the rising tide lifting all boats and an ebb tide lowering them. Hence, the collective actions of the individual economies matter a great deal as far as the mobile factor goes. ...

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