What Drives Home Market Advantage?

A. Kerem Coşar, Felix Tintelnot, Paul Grieco and Shengyu Li

No 10852, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In the automobile industry, as in many tradable goods markets, firms usually earn their highest market share within their domestic market. The goal of this paper is to disentangle the supply- and demand-driven sources of the home market advantage. While trade costs, foreign production costs, and taste heterogeneity all matter for market outcomes, we find that a preference for home brands is the single most important driver of home market advantage - even after controlling for brand histories and dealer networks. Furthermore, we also find that consumers favor domestically producing brands regardless of the historical brand origin.

Keywords: Automobile industry; Market segmentation; Trade and foreign direct investment (search for similar items in EconPapers)
JEL-codes: F1 L1 (search for similar items in EconPapers)
Date: 2015-09
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: What drives home market advantage? (2018)
Working Paper: What Drives Home Market Advantage? (2015)
Working Paper: What Drives Home Market Advantage? (2015)
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