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Market Access and Home Market Effect

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  • Karavidas Dionysios

    (Department of Economics, Kemmy Business School, University of Limerick, Limerick, Ireland)

Abstract

Based on the standard Footloose Capital model developed by Martin and Rogers (1995), I consider an integrated model that consists of a system of two regions and a third external region, in order to study the impact of improved market access on the Home Market Effect within the system of the two regions. The concept of the Home Market Effect is well known in the literature, but once we extend the number of regions, many are unknown. The main finding of the model suggests that improved market access with respect to an external market enhances the Home Market Effect within the system of the two regions. Interestingly, I show that this finding comes from the fact that improved market access increases the Market Access Effect, while it has no impact on the Market Crowding Effect.

Suggested Citation

  • Karavidas Dionysios, 2020. "Market Access and Home Market Effect," Open Economics, De Gruyter, vol. 3(1), pages 42-49, January.
    • Handle: RePEc:vrs:openec:v:3:y:2020:i:1:p:42-49:n:6
    DOI: 10.1515/openec-2020-0003
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    More about this item

    Keywords

    Market Access; Home Market Effect; Footloose Capital; Internal Geography;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F6 - International Economics - - Economic Impacts of Globalization
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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