Market size, trade, and productivity reconsidered: poverty traps and the home market effect

Marcus Berliant and Takatoshi Tabuchi

MPRA Paper from University Library of Munich, Germany

Abstract: To investigate questions related to migration and trade, a model of regional or international development is created by altering Melitz and Ottaviano (2008) to include a labor market. The model is then applied to analyze poverty traps and the home market effect. We find that in the spatial economics context of migration but no trade, poverty can persist unless population in one region of many is pushed past a threshold. Then growth commences. In the context of trade but no migration, the home market effect holds for a range of parameters, similar to previous literature. However, unlike previous literature, we find that if populations in countries are highly asymmetric, the home market effect can be reversed.

Keywords: Monopolistic competition; Poverty trap; Home market effect; Labor market clearing (search for similar items in EconPapers)
JEL-codes: F12 R11 (search for similar items in EconPapers)
Date: 2024-01-29
New Economics Papers: this item is included in nep-geo and nep-ure
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Related works:
Working Paper: Market size, trade, and productivity reconsidered: poverty traps and the home market effect (2024)
Working Paper: Market size, trade, and productivity reconsidered: poverty traps and the home market effect (2024)
Working Paper: Market size, trade, and productivity reconsidered: Poverty traps and the home market effect (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:119993

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