The home market and the pattern of trade: round three

Thomas Holmes () and John Stevens ()

No 2002-23, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: 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--industry types differentiated only by the degree of scale economies--and find that market size reemerges as a relevant force in determining industrial structure.

Keywords: Industrial organization (Economic theory); Markets (search for similar items in EconPapers)
Date: Written 2002
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Working Paper: The home market and the pattern of trade: round three (2002)
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