Spatial Markets in a National Framework: Measurement Issues

Abstract

When we consider the national economic space as a system of regional markets, there arises a question about the strength of the bonds between the elements of this system, and the magnitude of the system effects. The article is dedicated to studying this issue in the context of measurement capabilities. It is shown that the tools designed to study the connectivity of the national economic space should, firstly, be sensitive to the ‘shift’ of the geographical borders of the markets from the borders that have been formally established (i.e., be focused on studying the phenomena of economic activity delocalization) and, secondly, contain algorithms for matching connectivity estimates at different levels of the hierarchy of the markets system. The author describes three approaches to modeling the bonds between regional markets. These approaches differ by the criterion of integration of economic space. According to the first approach the criterion of integration is the implementation of the law of one price, the second approach uses the presence of spatial externalities, and the third one uses the presence of system effects as such criterion. It is found that the third approach has the greatest potential, both in terms of studying the channels of spatial diffusion of economic impulses from one market to another, and in terms of taking into account the hierarchy of space. The author examines the possibilities of assessing the connectivity of the national economic space as a whole on the basis of aggregated measures of system effects. There are three types of effects that are built on the basis of interregional input-output tables in order to study the emergent properties of the system of regional markets: spillover effects, feedback effects and coalition effects. The author defines the relationship between these effects. It is shown that the coalition effects are a universal measure, because, firstly, they take into account both the spillover effects and the feedback effects, and secondly, they can be estimated without changing the basic assumptions of calculations at different levels of the hierarchy of the regional markets system. Within the framework of the third approach, the author proposes a scheme for analyzing the structure of the national economic space, which integrates assessments of interregional interactions and intraregional connectivity