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Capital mobile et effet d’attraction du marché domestique (home market effect) .
Author(s) -
Takatsuka Hajime,
Zeng DaoZhi
Publication year - 2012
Publication title -
canadian journal of economics/revue canadienne d'économique
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.773
H-Index - 69
eISSN - 1540-5982
pISSN - 0008-4085
DOI - 10.1111/j.1540-5982.2012.01727.x
Subject(s) - homogeneous , offset (computer science) , capital (architecture) , economics , capital good , business , monetary economics , industrial organization , microeconomics , computer science , geography , public good , physics , archaeology , thermodynamics , programming language
Most existing studies examine the home market effect (HME) in a framework with immobile labour as the only production factor and the assumption of a freely traded homogeneous good is known to be crucial for the HME to emerge. This study explores the HME in the presence of mobile capital by use of a footloose capital model allowing for positive transport costs of the homogeneous good. The mobile capital generates a channel to offset the trade imbalance of a country. As a result, the HME always appears for arbitrary transport costs in both sectors of differentiated and homogeneous goods.