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Please use this identifier to cite or link to this item: http://ntour.ntou.edu.tw:8080/ir/handle/987654321/38641

Title: Home Market Effects in the Chamberlinian-Ricardian World
Authors: Yo-Yi Huang, Cheng-Te Lee, Deng-Shing Huang
Contributors: 國立臺灣海洋大學:應用經濟研究所
Keywords: country size;home market effects;technology differential
Date: 2013-04
Issue Date: 2016-10-21T08:33:37Z
Publisher: Bulletin of Economic Research
Abstract: Abstract:According to conventional home market effects, free trade tends to shrink the market share for a smaller economy in differentiated manufacturing goods, and in the extreme, leads to a complete hollowing out of the industry. Departing from the original Helpman–Krugman modelling assumptions behind the home market effects, we introduce a technology advantage in terms of the difference in fixed cost and/or marginal cost between trading partners and prove that home market effects will be offset and even reverse if a small economy has better technology than another country. With a higher elasticity of substitution, the marginal cost advantage becomes more important if it is to dominate the home market effect. We also show that even with an identical country size, the intra-industry trade addressed in the existing literature may not occur; it will occur only if the technology differential lies within a certain range that is positively affected by the level of transport cost.
Relation: 66(1), pp.36-54
URI: http://ntour.ntou.edu.tw:8080/ir/handle/987654321/38641
Appears in Collections:[應用經濟研究所] 期刊論文

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