Sectoral Trade Freeness and Agglomeration in the EU: An Empirical Test Approach

This paper studies the evolution of trade freeness and of the agglomeration of production, and their relationship at the sectoral level in a selected group of EU countries. Our main objectives are the search for stylized facts about their relationship and to check how our findings relate to the theoretical prediction about it in case of the Home Market Effect. Our sectoral focus requires an original testing approach based on the combination of different bootstrap distributions. The results discussed show that a systematic relationship between trade freeness and agglomeration does not emerge at the sectoral level, this is true also for those sectors which support the Home Market Effect hypothesis.