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What Drives Home Market Advantage?

A. Kerem Cosar, Paul L. E. Grieco, Shengyu Li, Felix Tintelnot

NBER Working Paper No. 21583
Issued in September 2015, Revised in July 2016
NBER Program(s):The Industrial Organization Program, The International Trade and Investment Program, The Productivity, Innovation, and Entrepreneurship Program

In the automobile industry, as in many tradable goods markets, firms usually earn their highest market share within their domestic market. The goal of this paper is to disentangle the supply- and demand-driven sources of the home market advantage. While trade costs, foreign production costs, and taste heterogeneity all matter for market outcomes, we find that a preference for home brands is the single most important driver of home market advantage - even after controlling for brand histories and dealer networks. Furthermore, we also find that consumers favor domestically producing brands regardless of the historical brand origin.

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Document Object Identifier (DOI): 10.3386/w21583

Published: A. Kerem Coşar, Paul L.E. Grieco, Shengyu Li, Felix Tintelnot, What drives home market advantage?, Journal of International Economics, Volume 110, 2018, Pages 135-150, ISSN 0022-1996, https://doi.org/10.1016/j.jinteco.2017.11.001. citation courtesy of

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