It is widely recognised that public-sector purchasers tend to discriminate in favour of domestic suppliers. We study the consequences of home-biased public procurement on international specialisation. In the theoretical analysis we find two effects. First, a country will specialise in the sector...

Adding public expenditure to the core-periphery model creates a linkage that can override the agglomeration forces. Consequently, the equilibrium distribution of economic activity depends upon the nature and allocation of public expenditure. Appropriate public expenditure eliminates the...

Most of the theoretical and empirical studies on the Home Market Effect (HME) assume the existence of an "outside good" that absorbs all trade imbalances and equalizes wages. We study the consequences on the HME of removing this assumption. The HME is attenuated and, more interestingly, it...

No abstract.