Search results for "Home market effect"
showing 4 items of 4 documents
Testing the Home Market Effects in a Multi-country World: The Theory
2004
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 ho…
Terms of trade, catch-up, and home-market effect: The example of Japan
2007
Abstract This paper explores theoretically and empirically the medium- and long-run relation of the terms of trade (ratio of traded goods prices) and economic growth of a pair of countries—one of which experiences a major catch-up process towards the other. Two theoretical interdependencies between the terms of trade and economic growth are offered: the home-market effect and the productivity-shock effect. These two effects are tested against each other in a cointegration analysis on data for Japan and the US from 1971 until 1997. Income is cointegrated with the terms of trade. The relevant empirical channel is the home-market effect. However, financial-market effects appear also to be rele…
Regional Inequality and Product Variety
2005
We investigate how differences in set-up costs of various types affect the trade-off between global efficiency and spatial equity and show that the standard assumption of symmetry in fixed costs masks the existence of an interesting effect: the range of available varieties varies depends on the spatial distribution of firms. In such a setting, even when the market outcome leads to excessive agglomeration under symmetric fixed costs, a planner opts for asymmetric fixed costs and more agglomeration. The reason is that the losses induced by more agglomeration are offset by the gains due to additional product variety.
The internationalisation of the Spanish food industry: the home market effect and European market integration
2015
<p>The objective of this study was to analyse, from a long-term perspective, the factors determining the process of the internationalisation of the Spanish agrifood industry. The paper concentrates on the empirical verification of the existence of a home market effect in the food and drink industries in Spain and on the effects on trade flows of integration into the European Union. With this aim in mind, we took into account the latest contributions to the estimation of the gravity equation for a sample of export flows from 13 agrifood subsectors between 1970 and 2012, with a destination of 175 markets. From the results of the study the existence of the “home market effect” stands out…