هزینه های تجارت و اثر بازار خانه

Most of the theoretical and empirical studies on the Home Market Effect (HME) assume the existence of an “outside good” that absorbs all trade imbalances and equalizes wages. We study the consequences on the HME of removing this assumption. The HME is attenuated and, more interestingly, it becomes non-linear. The non-linearity implies that the HME is more important for very large and very small countries than for medium size countries. The empirical investigation conducted on a database comprising 25 industries, 25 countries, and 7 years confirms the presence of the HME and of its non-linear shape.

Models characterized by the presence of increasing returns to scale, monopolistic competition, and trade costs typically give rise to what has become known as the Home Market Effect after Krugman (1980) and Helpman and Krugman (1985). The Home Market Effect (HME) is defined as a more than proportional relationship between a country's share of world production of a good and its share of world demand for the same good. Thus, a country whose share of world demand for a good is larger than average will have – ceteris paribus – a more than proportionally larger-than-average share of world production of that good.1 The HME is so closely associated to the presence of increasing returns to scale (IRS) and monopolistic competition (MC) that it has been used as a discriminating criterion to testing trade theory in a novel approach pioneered by Davis and Weinstein, 1999 and Davis and Weinstein, 2003. Since then, as it will be discussed below, further theoretical and empirical research has explored the robustness of the HME and has searched for additional discriminating criteria.

We have eliminated the outside good from the model that used the HME to test trade theories. Our theoretical results confirm that the discriminating criterion based on the HME is robust to such model modification except in the special case of perfect substitutability between domestic and foreign production of the CRS–PC good combined with prohibitive trade costs for this good. This special case is never observed at the level of industry aggregation normally used in the empirical literature. It seems safe to conclude, therefore, that the HME remains a valid criterion with which to test trade theories. The robustness of the HME has another important implication. It implies that the outside good assumption, although clearly at odds with reality, does not affect qualitatively the results concerning international specialization and the direction of trade.