Market size and industry location: Traded vs non-traded goods
(2005) Journal of Urban Economics — Vol. 58, n° 1, p. 24-44 (2005)
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- Abstract
- We investigate the importance of market size as a determinant for industrial location patterns. In order to focus on a broad range of sectors, including services, both traded and non-traded goods are taken into consideration. In our model, traded goods industries always exhibit a 'home market effect' (HME), whereas the existence of such an effect for non-traded goods crucially hinges on the degree of product differentiation. High degrees of product differentiation generally support a HME, whereas a reverse HME may arise when products are sufficiently close substitutes. Our results are in accord with the observed existence of a market size dependent 'functional hierarchy', both within and between countries. (c) 2005 Elsevier Inc. All rights reserved.
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Behrens, K. (2005). Market size and industry location: Traded vs non-traded goods. Journal of Urban Economics, 58(1), 24-44. https://doi.org/10.1016/j.jue.2005.01.002 (Original work published 2005)