TY  - JOUR
AU  - Davis,Donald R.
TI  - The Home Market, Trade, and Industrial Structure
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6076
PY  - 1997
Y2  - June 1997
UR  - http://www.nber.org/papers/w6076
L1  - http://www.nber.org/papers/w6076.pdf
N1  - Author contact info:
Donald R. Davis
Columbia University, Department of Economics
1038 Intl. Affairs Building
420 West 118th St.
New York, NY 10027
Tel: 212/854-4037
Fax: 212/854-8059
E-Mail: drd28@columbia.edu
AB  - 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 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.  The paper discusses available evidence on the relative trade costs for differentiated and homogenous goods.  No compelling argument is found that market size will matter for industrial structure.
ER  -