The Home-Market Effect and Bilateral Trade Patterns

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The Home Market Effect and Bilateral Trade Patterns

By Gordon H. Hanson and Chong Xiang Abstract. We develop a monopolistic-competition model of trade with many industries to examine how home-market effects vary with industry characteristics. Industries with high transport costs and more differentiated products tend to be more concentrated in large countries than industries with low transport costs and less differentiated products. We test this ...

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The Home Market Effect and Patterns of Trade Between Rich and Poor Countries

This paper proposes a new theoretical framework for studying the patterns of trade between rich and poor countries by incorporating nonhomothetic preferences into the standard home market effect models of trade. It has a continuum of Dixit-Stiglitz monopolistic competitive sectors with iceberg trade costs. There are two countries, which may differ in their per capita labor endowment and the pop...

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Productivity Spillovers, Terms of Trade and the ’Home Market Effect’

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The Home Market, Trade, and Industrial Structure

Does national market size matter for industrial structure? This has been suggested by theoretical work on "home market" effects. In the present paper, I show that what previously was regarded as an assumption of conveniencetransport costs only for the differentiated goods-matters a great deal. In afocal case in which differentiated and homogeneous goods have identical transport costs, the home ...

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The Home Market and the Pattern of Trade: Round Three

Does national market size matter for industrial structure? Round One (Krugman) answered in the affirmative: Home market effects matter. Round Two (Davis) refuted this, arguing that an assumption of convenience–transport costs only for the differentiated goods–conveniently obtained the result. In Round Three we relax another persistent assumption of convenience–two industry types differentiated ...

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ژورنال

عنوان ژورنال: American Economic Review

سال: 2004

ISSN: 0002-8282

DOI: 10.1257/0002828042002688