Regional inequalities in product per capita and labour productivity in the EU are large and persistent. Building on a model in which aggregate increasing returns is the result of the increase in the number of varieties of composite services, under competitive manufactures, we derive a simple and...

The power purchasing parity (PPP) hypothesis and the law of one price (LOP) predict (long-run) price equalization across the space. In the absence of market frictions and transport costs, arbitrage should guarantee the same price, in a common currency, for a given commodity in different...