Abstract
Differences in regulations, technical standards and national medical cultures across EU member states created a highly segmented pharmaceutical market in Europe prior to the implementation of the Single Market Programme. The subsequent reduction in non-tariff barriers to trade would be expected to have an impact on where pharmaceutical multinationals locate production within the EU. Using discrete choice models, we study separately the determinants of multinational location choices in terms of expanded production at existing facilities and location of start-up firms. Our results support the findings of models which predict reduced rather than increased agglomeration in the face of trade-cost reductions.
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