Okubo, Toshihiro; Picard, Pierre M.; Thisse, … - In: Journal of International Economics 82 (2010) 2, pp. 230-237
We show that heterogeneous firms choose different locations in response to market integration. Specifically, decreasing trade costs lead to the gradual agglomeration of efficient firms in the larger country where they have access to a bigger pool of consumers. In contrast, high-cost firms seek...