This paper develops a general-equilibrium model which features the Home Market Effect and land use for production in the sector of increasing returns to scale. The land rent in the larger region is higher, meanwhile, the larger region holds more-than-proportionate share of firms, the so called...

We investigate the issue of offshoring in a model of two countries and one sector of increasing returns to scale. Our model uncovers that in a setting of footloose capital, offshoring occurs and evolves in an inverted-U pattern when transport costs decline. This result can explain China's...