The potential benefits of regionally differentiated Covid-19 policies

Abstract

Abstract While many countries introduced regionally differentiated policy measures for Covid-19, such as social distancing, lockdowns and working from home, the Netherlands opted for national binding policies already in the early stages of the pandemic. Using detailed data on the impacts of the first lockdown on consumers’ and producers’ behaviour, as well as scenarios varying on intensities of measures, we show that regional differentiated policies could have mitigated a significant part of the losses in production resulting from the Covid-19 measures. The self-organizing capacities of the regional economic system fuel this mitigation, with regional variation in policies being a sufficient precondition. Coordinated and explicitly planned policies aimed at supporting specific region-industry clusters may further mitigate impacts but are difficult to achieve due to the number (wickedness) of possible policy options. It would also assume full information and coordination capacities in governance that are not present. The results of our analysis hold important implications for future mitigation strategies for pandemics or other regional shocks.