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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