On the home market effect: theory and empirical evidence

Trionfetti, Federico (1999) On the home market effect: theory and empirical evidence. CEPDP, 430. Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 075301288X

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Abstract

This paper addresses the question of how to discriminate between the H-O paradigm and the C-H-O paradigm of international trade. The test is based on the home-biased expenditure. The model predicts a positive relationshipp between a country''s share of world''s output (in any particular sector) and the country''s share of world''s home-biased expenditure if and only if the sector is characterize4d by IRS and monopolistic competition. The Empirical implementation showed an important but not overwhelming presence of the relationship. Specifically, 55% of the industrial activity could be attributed to the H-O paradigm while 45% could be attributed to the C-H-O paradigm.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://cep.lse.ac.uk
Additional Information:	© 1999 Trionfetti
Library of Congress subject classification:	H Social Sciences > HF Commerce H Social Sciences > HB Economic Theory
Sets:	Collections > Economists Online Research centres and groups > Centre for Economic Performance (CEP)
Rights:	http://www.lse.ac.uk/library/rights/LSERO.htm
Identification Number:	430
URL:	http://eprints.lse.ac.uk/20215/

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