This paper analyses the effects of the creation or removal ofborders on firms' profits and their optimal location in an autarkicregion. A firm chooses a position close to a border if a crucialdegree of openness is achieved. Furthermore, the positive effectof removal of borders decreases in greater distance from theborder. The results of econometric analysis partially confirm thehypothesis of increasing firm foundations close to the border. Thegrowth rates of trade-firm foundations and start-ups in businessrelated services in East German districts near to the Polish borderare higher than in regions further away from the border.
Engel, Dirk (1999), Der Einfluß der Grenznähe auf die Standwahl von Unternehmen: Eine theoretische Analyse und empirische Befunde für Ostdeutschland, ZEW Discussion Paper No. 99-18, Mannheim. Download