On the Pervasiveness of Home Market Effects

Keith Head, Thierry Mayer and John Ries ()

No 862, Econometric Society World Congress 2000 Contributed Papers from Econometric Society

Abstract: Krugman's model of trade between two countries of unequal size predicts that the country with the relatively large number of consumers is the net exporter and host of a disproportionate share of firms in the differentiated good sector. He terms these results home market effects. This paper analyzes two models that offer alternatives to Krugman's assumptions of Dixit-Stiglitz monopolistic competition with iceberg transport costs. Using a framework of location choice, we generate strikingly similar results for the three models. The common ingredients of these imperfect competition models are trade costs and increasing returns to scale.

Date: 2000-08-01
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Citations: View citations in EconPapers (6)

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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 (2002)
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