The Home Market Effect in a Multicountry Space
نویسندگان
چکیده
The concept of home market effect (HME) refers to the phenomenon that firms agglomerate more than the market share in a large country. Krugman (1980) set up two models, showing that firms agglomerate more than the market share and that the wage is higher in the larger country. In Takahashi et al (2010), the equivalence between a larger firm share and a higher wage is proved. All of them are based on a space of two countries. This paper examines the HME in a multicountry space. We find that both the wage and firm shares are ordered according to the countries’ sizes. And, they exhibit U-shape relationship with respect to the falling transport costs.
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