The Home Market, Trade, and Industrial Structure
AbstractDoes national market size matter for industrial structure? This has been suggested by theoretical work on 'home market' effects. In the present paper, the author shows 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. This paper discusses available evidence on the relative trade costs for differentiated and homogeneous goods. No compelling argument is found that market size will matter for industrial structure. Copyright 1998 by American Economic Association.
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Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Review.
Volume (Year): 88 (1998)
Issue (Month): 5 (December)
Other versions of this item:
- Davis, D.R., 1997. "The Home Market, Trade, and Industrial Structure," Papers 597, Harvard - Institute for International Development.
- Donald R. Davis, 1997. "The Home Market, Trade and Industrial Structure," Harvard Institute of Economic Research Working Papers 1800, Harvard - Institute of Economic Research.
- Donald R. Davis, 1997. "The Home Market, Trade, and Industrial Structure," NBER Working Papers 6076, National Bureau of Economic Research, Inc.
- Donald R. Davis, 1997. "The home market, trade, and industrial structure," Staff Reports 35, Federal Reserve Bank of New York.
- F1 - International Economics - - Trade
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
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