The Home Market, Trade, and Industrial Structure

Donald Davis ()

No 6076, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Does national market size matter for industrial structure? This has been suggested by theoretical work on home market' effects, as in Krugman (1980, 1995). In this paper, I show that what previously was regarded as an assumption of convenience - transport costs only for the differentiated goods - matters a great deal. In a focal case in which differentiated and homogeneous goods have identical transport costs, the home market effect disappears. The paper discusses available evidence on the relative trade costs for differentiated and homogenous goods. No compelling argument is found that market size will matter for industrial structure.

JEL-codes: F1 O1 (search for similar items in EconPapers)
Date: 1997-06
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published as American Economic Review (December 1998).

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Related works:
Journal Article: The Home Market, Trade, and Industrial Structure (1998)
Working Paper: The home market, trade, and industrial structure (1997)
Working Paper: The Home Market, Trade and Industrial Structure (1997)
Working Paper: The Home Market, Trade, and Industrial Structure (1997)
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