Models of economic geography predict an increase in concentration when transport costs diminish. These models, however, focus solely on the analysis of the production factor labour. Neglecting capital, though, might lead to disturbed results - particularly in the European context where capital,...

EMU is accompanied by increased market integration and factor mobility - especially of the production factor capital. Up to date, there is no clear indication concerning the specialisation tendencies to be expected due to these impacts. This paper thus investigates the driving forces of sectoral...