It is uncertain whether the fundamental 'home market effect' (HME) generalizes from a two-country model to a more realistic setting with multiple countries. We present a three-country version of the seminal model by Krugman (1980) and analyse under which circumstances the HME is present once...

We estimate the variety gains of trade in Estonia, Latvia and Lithuania following the fall of the iron curtain more than a quarter of a century ago. We apply the methodology of Feenstra (1994); Broda and Weinstein (2006); Ardelean and Lugovskyy (2010) and Soderbery (2015) to domestic and...

We propose and apply a new theory-consistent algorithm, which uses disaggregated inter-city trade data to identify a pyramidic city system with central places and associated hinterlands. Because central places possess more industries than the cities in their hinterlands, and because industries,...

We propose and apply a new theory-consistent algorithm, which uses disaggregated inter-city trade data to identify a pyramidic city system with central places and associated hinterlands. Because central places possess more industries than the cities in their hinterlands, and because industries,...

The home market effect (HME) is a distinguishing feature of the ?new? theory of international trade, but it is uncertain whether this effect survives if one moves beyond the simplifying setup with only two countries. We present a three -country version of the seminal model by Krugman (1980) and...

International trade is dominated by a small number of very large firms. Models of trade with heterogeneous firms have been developed to study the causes and consequences of this observation. The canonical model of trade with heterogeneous firms shows that trade leads to between-firm...

Large cities (central places) excessively export to smaller cities in their surrounding hinterland. Using Japanese inter-city trade data, we identify a substantial centrality bias: Shipments from central places to their hinterland are 50%-125% larger than predicted by gravity forces. This upward...

The present paper studies the variety gains of regional integration in Asia. Applying a heterogenous firm model we are able to assess the gains arising from the increased product and consumer choice, which is not possible in trade models with representative firms. We analyse the impacts of the...

The home market effect (HME) is commonly defined as a more than proportional supply response to a demand shock. Recent theoretical literature, however, shows that predictions from the traditional twocountry framework do not always survive in multi-country settings. This is because 'third'...

In this paper, the question of the location of exporters of manufactured goods within a country is investigated. Based on insights from new trade theory, the new economic geography (NEG) and gravity-equation modelling, an empirical model is specified with agglomeration and increasing returns...