Year: 1997
Type: report
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 conveniencetransport costs only for the differentiated goodsmatters 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 homogeneous goods. No compelling argument is found that market size will matter for industrial structure.
DOI: 10.3386/w6076
Author: Donald R. Davis
Institutions: National Bureau of Economic Research, Columbia University
Language: English
Topic: Global trade and economics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3124497306