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6 J. Common Mkt. Stud. 1 (1967)

handle is hein.journals/jcmks6 and id is 1 raw text is: 



A  METHOD FOR PLANNING ECONOMIC
        INTEGRATION FOR SPECIFIED
                        INDUSTRIES'
                     By  DONALD   W.  BAERRESEN
                            INTRODUCTION
Tms   study presents a method  for establishing an economic  basis for
making   planning  decisions associated with economic  integration of
specified industries. The purpose  of presenting such a method   is to
show   how   various  economic   considerations  affecting integration
can  be combined   to determine  an 'economically  desirable' form of
integration.
   Geometric  illustrations are employed in order to depict the develop-
ment  and  application of this method. Algebra,  however,  could have
been  utilized instead for this purpose. Quite probably there are other
methods   (notably those employing  linear or non-linear programming
techniques) which  also can serve to reach the required decisions related
to the formation of economic  integration.2 It is felt that the particular
method   discussed in  this chapter provides lucid illustration of the
requisite data and interrelationships to be considered in seeking by any
method   an economically  desirable plan of integration.
   The  study is divided into three main  parts. Part I is devoted  to
 presentation of a model, which, for ease of exposition, is based on a
 closed economy.   In Part  II various components   of the model   are
 analysed separately and explanations are given for the assumptions used
 in Part I. Part III concerns the expansion  of this model to  include
 export possibilities-particularly under a discriminatory pricing system.

                                PART  I
   The  following model  provides  an economic  basis for determining
 within the framework   of economic  integration for a region: (I) the
 location and size of producing units, and (2) the pattern of movement
 I The author is deeply appreciative of the many valuable suggestions, the patience and encour-
 agement which he received in long discussions with Joseph Grunwald concerning the contents
 of this study. He wishes also to acknowledge the helpful comments he obtained from colleagues
 at The Brookings Institution, members of the November 1963 conference in Santiago de Chile on
 'Economic integration in Latin America', and from other persons who read drafts of this study.
 s For an example of another method, see: Alan S. Manne and Harry M. Markowitz, Studies in
 Process Analysis, Economy-wide Production Capabilities, John Wiley & Sons, New York, 1963,
 Chapter 6.
                                   1

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