Keywords: Market size, home market effects, scale economies
Abstract: Does national market size matter for industrial structure? Round One (Krugman)
answered in the affirmative: Home market effects matter. Round Two
(Davis) refuted this, arguing that an assumption of
convenience--transport costs only for the differentiated
goods--conveniently obtained the result. In Round Three we relax
another persistent assumption of convenience--industry types
differentiated only by the degree of scale economies--and find that
market size reemerges as a relevant force in determining industrial structure.
Full paper (366 KB PDF)
Home | FEDS | List of 2002 FEDS papers
To comment on this site, please fill out our feedback form.
Last update: May 3, 2002