This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Testing the Home Market Effects in a Multi-country World: The Theory

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Takatoshi Tabuchi
Kristian Behrens
Andrea R. Lamorgese

Additional information is available for the following registered author(s):

Abstract

We extend the two-country model by Krugman (1980) to a multi-country set-up and show that the `home-market effect' highlighted with two countries does not readily extend to such a more general setting. In particular, we prove that the most important result, namely the disproportionate causation from demand to supply, generalizes only under the fairly implausible assumption of pairwise symmetric trade costs between all countries. We argue, therefore, that the implications of product differentiation for the structure of world trade are better characterized in terms of spatial (`accessibility') and non-spatial (`attraction') effects, and we provide a theory-based specification that suggests how to test the home market effect in a more general setting

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://repec.org/esFEAM04/up.1818.1080354839.pdf
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by Econometric Society in its series Econometric Society 2004 Far Eastern Meetings with number 595.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation: 11 Aug 2004
Date of revision:
Handle: RePEc:ecm:feam04:595

Contact details of provider:
Phone: 1 212 998 3820
Fax: 1 212 995 4487
Email:
Web page: http://www.econometricsociety.org/pastmeetings.asp
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).

Related research
Keywords: home market effect; hub effect; market potential; new trade theory; economic geography;

Other versions of this item:

Find related papers by JEL classification:
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Smith, Tony E., 1975. "A choice theory of spatial interaction," Regional Science and Urban Economics, Elsevier, vol. 5(2), pages 137-176, May. [Downloadable!] (restricted)
  2. Gianmarco Ottaviano & Takatoshi Tabuchi & Jacques-FranÁois Thisse, 2002. "Agglomeration and Trade Revisited," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(2), pages 409-436, May. [Downloadable!] (restricted)
    Other versions:
  3. Davis, Donald R. & Weinstein, David E., 2003. "Market access, economic geography and comparative advantage: an empirical test," Journal of International Economics, Elsevier, vol. 59(1), pages 1-23, January. [Downloadable!] (restricted)
  4. Robert C. Feenstra & James R. Markusen & Andrew K. Rose, 2001. "Using the gravity equation to differentiate among alternative theories of trade," Canadian Journal of Economics, Canadian Economics Association, vol. 34(2), pages 430-447, May. [Downloadable!] (restricted)
  5. Weibull, Jorgen W., 1976. "An axiomatic approach to the measurement of accessibility," Regional Science and Urban Economics, Elsevier, vol. 6(4), pages 357-379, December. [Downloadable!] (restricted)
  6. John Luke Gallup & Jeffrey D. Sachs & Andrew Mellinger, 1999. "Geography and Economic Development," CID Working Papers 1, Center for International Development at Harvard University. [Downloadable!]
  7. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476.
  8. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June. [Downloadable!] (restricted)
    Other versions:
  9. Markusen, James R. & Venables, Anthony J., 1988. "Trade policy with increasing returns and imperfect competition : Contradictory results from competing assumptions," Journal of International Economics, Elsevier, vol. 24(3-4), pages 299-316, May. [Downloadable!] (restricted)
    Other versions:
  10. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-59, December. [Downloadable!] (restricted)
  11. Huiwen Lai & Daniel Trefler, 2002. "The Gains from Trade with Monopolistic Competition: Specification, Estimation, and Mis-Specification," NBER Working Papers 9169, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  12. Ottaviano, Gianmarco Ireo Paolo & Thisse, Jacques-François, 2003. "Agglomeration and Economic Geography," CEPR Discussion Papers 3838, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  13. Gallup, J.L. & Sachs, J.D. & Mullinger, A., 1999. "Geography and Economic Development," Papers 1, Chicago - Graduate School of Business.
  14. F Trionfetti, 1999. "On the Home Market Effect: Theory and Empirical Evidence," CEP Discussion Papers dp0430, Centre for Economic Performance, LSE. [Downloadable!]
  15. Davis, Donald R. & Weinstein, David E., 1999. "Economic geography and regional production structure: An empirical investigation," European Economic Review, Elsevier, vol. 43(2), pages 379-407, February. [Downloadable!] (restricted)
    Other versions:
  16. Head, Keith & Mayer, Thierry, 2004. "The empirics of agglomeration and trade," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 59, pages 2609-2669 Elsevier. [Downloadable!] (restricted)
    Other versions:
  17. Fujita, Masahisa & Mori, Tomoya, 1996. "The role of ports in the making of major cities: Self-agglomeration and hub-effect," Journal of Development Economics, Elsevier, vol. 49(1), pages 93-120, April. [Downloadable!] (restricted)
  18. Fujita, Masahisa & Thisse, Jacques-François, 1996. "Economics of Agglomeration," CEPR Discussion Papers 1344, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  19. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June. [Downloadable!] (restricted)
    Other versions:
  20. Federico Trionfetti, 2001. "Using home-biased demand to test trade theories," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 137(3), pages 404-426, September. [Downloadable!] (restricted)
  21. Head, Charles Keith & Mayer, Thierry & Ries, John, 2002. "On the Pervasiveness of Home Market Effects," CEPR Discussion Papers 3454, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Matteo Bugamelli & Alfonso Rosolia, 2006. "Productivity and foreign competition," Temi di discussione (Economic working papers) 578, Bank of Italy, Economic Research Department. [Downloadable!]
  2. Balogun, Emmanuel Dele, 2009. "Determinants of West African Monetary Zone (WAMZ)countries global export trade: do foreign reserves and independent exchange rates matter?," MPRA Paper 12929, University Library of Munich, Germany. [Downloadable!]
  3. BEHRENS, Kristian, 2004. "Market size and urban hierarchy," CORE Discussion Papers 2004029, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
  4. BEHRENS, Kristian & LAMORGESE, Andrea R. & OTTAVIANO, Gianmarco I.P. & TABUCHI, Takatoshi, 2005. "Testing the Ôhome market effectÕ in a multi-country world," CORE Discussion Papers 2005055, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
  5. Balogun, Emmanuel Dele, 2007. "Exchange rate policy and export performance of WAMZ countries," MPRA Paper 6233, University Library of Munich, Germany. [Downloadable!]
  6. Stephen Redding, 2009. "Economic Geography: A Review of the Theoretical and Empirical Literature," CEP Discussion Papers dp0904, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
  7. Kristian Behrens & Cem Ertur & Wilfried Koch, 2007. "Dual' gravity: Using spatial econometrics to control for multilateral resistance," CIRJE F-Series CIRJE-F-501, CIRJE, Faculty of Economics, University of Tokyo. [Downloadable!]
    Other versions:
  8. Diego Puga, 2008. "Agglomeration and cross-border infrastructure," Working Papers 2008-06, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales. [Downloadable!]
    Other versions:
  9. Marius Brülhart & Pamina Koenig, 2005. "New Economic Geography meets Comecon: Regional Wages and Industry Location in Central Europe," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 05.01, Université de Lausanne, Faculté des HEC, DEEP. [Downloadable!]
  10. Chao-cheng Mai & Shin-Kun Peng & Takatoshi Tabuchi, 2006. "Economic Geography with Tariff Competition," CIRJE F-Series CIRJE-F-435, CIRJE, Faculty of Economics, University of Tokyo. [Downloadable!]
    Other versions:
  11. Behrens, Kristian & Lamorgese, Andrea & Ottaviano, Gianmarco Ireo Paolo & Tabuchi, Takatoshi, 2005. "Changes in Infrastructure and Tariff Barriers: Local Vs. Global Impacts," CEPR Discussion Papers 5103, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  12. Head, Charles Keith & Mayer, Thierry, 2005. "Regional Wage and Employment Responses to Market Potential in the EU," CEPR Discussion Papers 4908, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  13. Steven Brakman & Harry Garretsen, 2009. "Trade and Geography: Paul Krugman and the 2008 Nobel Prize in Economics," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  14. Marius Brülhart & Federico Trionfetti, 2009. "A test of trade theories when expenditure is home biased," Working Papers halshs-00366530_v1, HAL. [Downloadable!]
    Other versions:
  15. Candau, Fabien, 2006. "The Spatial and Public Economics of Regions, a Theoretical and Empirical Survey," MPRA Paper 1153, University Library of Munich, Germany. [Downloadable!]
  16. Isabelle Mejean, 2006. "Can Firms’ Location Decisions Counteract the Balassa-Samuelson Effect?," Working Papers 2006-12, CEPII research center. [Downloadable!]
    Other versions:
  17. OTTAVIANO, Gianmarco I.P. & THISSE, Jacques-Franois, 2004. "New economic geography : what about the N ?," CORE Discussion Papers 2004065, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
    Other versions:
  18. Gianfranco De Simone, 2008. "Trade in Parts and Components and the Industrial Geography of Central and Eastern European Countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 144(3), pages 428-457, October. [Downloadable!] (restricted)
  19. Balogun, Emmanuel Dele, 2007. "Effects of exchange rate policy on bilateral export trade of WAMZ countries," MPRA Paper 6234, University Library of Munich, Germany. [Downloadable!]
  20. Pierre Picard & Takatoshi Tabuchi, 2007. "Self-organized Agglomerations and Transport Costs," The School of Economics Discussion Paper Series 0712, Economics, The University of Manchester. [Downloadable!]
Statistics
Access and download statistics

Did you know? IDEAS also indexes book chapters.

This page was last updated on 2009-11-25.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.