Behrens, Kristian; Lamorgese, Andrea R.; Ottaviano, … - Banca d'Italia - 2005
We propose a theory-based approach to testing the presence of the 'home market effect' in a multi-country world. Our framework extends Krugman's (1980, Am. Econ. Rev. 70(5), 950-959) model, in which the appeal of a country as a production site depends on both the relative size of its domestic...