On the Pervasiveness of Home Market Effects

Thierry Mayer, Keith Head and John Ries ()

No 3454, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Krugman?s (1980) model of trade predicts that the country with the relatively large number of consumers is the net exporter and hosts a disproportionate share of firms in the increasing returns sector. He terms these results 'home market effects'. This Paper analyzes three additional models featuring increasing returns, firm mobility, and trade costs to assess the robustness of home market effects to alternative modeling assumptions. We find strikingly similar results for two of the models that relax assumptions about the nature of demand, competition, and trade costs. A model that links varieties to nations rather than firms can, however, generate opposite results.

Keywords: Spatial competition; Home market effect; Increasing returns (search for similar items in EconPapers)
JEL-codes: F12 R3 (search for similar items in EconPapers)
Date: 2002-07
New Economics Papers: this item is included in nep-geo
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Citations: View citations in EconPapers (78)

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Related works:
Working Paper: On the Pervasiveness of Home Market Effects (2002)
Working Paper: On the Pervasiveness of Home Market Effects (2002)
Working Paper: On the pervasiveness of home market effects (2002)
Working Paper: On the pervasiveness of home market effects (2002)
Working Paper: On the Pervasiveness of Home Market Effects (2000)
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