The Home Market and the Pattern of Trade: Round Three

John J. Stevens, Thomas J. Holmes
2002 Social Science Research Network  
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-two industry types differentiated only by the degree of scale economies-and find that market size reemerges as a relevant force in
more » ... vant force in determining industrial structure. * Holmes, University of Minnesota and Federal Reserve Bank of Minneapolis (holmes@econ.umn.edu). Stevens, Board of Governors of the Federal Reserve System (John.J.Stevens@frb.gov).
doi:10.2139/ssrn.314424 fatcat:5plvapgzyfcjnpy4ngb35lgnta