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has been cited by the following article:
TITLE: The Home Market Effect under Constant Returns and Monopolistic Competition
AUTHORS: Wataru Johdo
KEYWORDS: Home Market Effect; Constant Returns to Scale; Monopolistic Competition
JOURNAL NAME: Theoretical Economics Letters, Vol.2 No.5, December 21, 2012
ABSTRACT: Most existing theoretical studies on home market effects depend crucially on the assumption of increasing returns to scale technology. This paper studies the consequences of the absence of increasing returns to scale on home market effects by employing a constant returns monopolistic competition model. This paper demonstrates that home market effects can emerge or disappear depending on the magnitude of the elasticity of substitution and transport costs even in the constant returns model with firm mobility. In particular, a reverse home market effect can result when the elasticity of substitution is low and transport costs are high.