The widespread debate on industrial mobility and on the consequences of industrial mobility for the income of local resources has motivated me to look closer at some immanent questions concerning optimal public policy. I think that regarding locations as endowed with some stock of local resources (especially local labour) and regarding local policy makers as interested in a high income of local resources is a quite realistic approach to the issue of rent-shifting public policy in view of industrial mobility. My attention has been especially drawn to the role of inter-industry mobility differentials for public policy. As soon as the discussion focuses on local resources, it becomes clear that the expansion of a mobile industry at some location will absorb local resources which may come from local immobile industries and that the contraction of a mobile industry will release local resources which may go to local illliIlobile industries. The present study is my dissertation for a doctorate in economics at the Universitat Mannheim. It evolved at the Universitat Mannheim, where I have been member of the Graduiertenkolleg Finanz- und Gutermarkte since October 1993, and at the University College London, where I stayed as a participant in the European Network for Training in Economic Research (ENTER) from November 1994 to April 1995. The implicit support by the Deutsche F orschungsgemeinschaft and the ERASMUS programme is gratefully acknowledged.

Inhalt

1 Introduction.- 2 The Literature.- 2.1 Industrial policy.- 2.2 Environmental policy.- 3 The Model.- 3.1 Main elements.- 3.2 Assumptions.- 3.3 Market structures.- 3.4 Public preferences.- 3.5 Best reply.- 3.6 Conflict.- 3.7 Local cooperation.- 3.8 Global cooperation.- 3.9 Graphical illustration.- 3.10 Re-interpretations.- 3.11 Outlook on extensions.- 4 Basic Extensions.- 4.1 Social policy.- 4.2 Asymmetric industries.- 4.3 Asymmetric locations.- 4.4 Inter-industry substitution.- 4.5 Number of locations.- 5 Extensions Regarding Welfare.- 5.1 Local consumption.- 5.2 Local ownership of industries.- 5.3 Emissions and industrial policy.- 5.4 Emissions and environmental policy.- 5.5 Combination of policies.- 6 Extensions Regarding Mobility.- 6.1 Imperfect intra-industry substitution.- 6.2 Mobility of local resources.- 7 Conclusion.- References.- List of figures.- List of notations.