Beschreibung:
This paper analyses the effects of the creation or removal of borders on firms' profits and their optimal location in an autarkic region. A firm chooses a position close to a border if a crucial degree of openness is achieved. Furthermore, the positive effect of removal of borders decreases in greater distance from the border. The results of econometric analysis partially confirm the hypothesis of increasing firm foundations close to the border. The growth rates of trade-firm foundations and start-ups in business related services in East German districts near to the Polish border are higher than in regions further away from the border.