TY - JOUR
T1 - Market size in globalization
AU - Kato, Hayato
AU - Okubo, Toshihiro
N1 - Funding Information:
We are particularly grateful to the Co-Editor, Stephan Yeaple, and the two anonymous referees for their valuable comments and suggestions. We wish to thank Richard Baldwin, Kiminori Matsuyama, Hajime Takatsuka, Kazuhiro Yamamoto and Dao-Zhi Zeng for their helpful discussions. Our thanks also go to the seminar and conference participants at the Asia Pacific Trade Seminars 2016 (National Taiwan), the Asian Meeting of the Econometric Society 2016 (Doshisya), the Applied Regional Science Conference (Kobe), Keio and Osaka for their useful comments. This paper was presented under a different title, “The Industrial Development in the Middle-sized Country” in several occasions. Financial support was gratefully received from the Japan Society for the Promotion of Science (grant number: JP16J01228 ). All remaining errors are our sole responsibility.
Publisher Copyright:
© 2017 Elsevier B.V.
PY - 2018/3
Y1 - 2018/3
N2 - A salient feature of the current globalization is a loss of manufacturing in developed countries and rapid industrialization in middle-sized developing countries. This paper aims to construct a simple three-country trade and geography model with different market sizes and non-constant wage rates. The large country fosters industrial agglomeration (geographical concentration) in the early stage of globalization, but loses manufacturing in the later stage of globalization. When losing manufacturing, the large country might be worse off. Thus, the large country might have an incentive to implement welfare-maintaining policies to prevent a loss of manufacturing. All of these results can be explained by market sizes.
AB - A salient feature of the current globalization is a loss of manufacturing in developed countries and rapid industrialization in middle-sized developing countries. This paper aims to construct a simple three-country trade and geography model with different market sizes and non-constant wage rates. The large country fosters industrial agglomeration (geographical concentration) in the early stage of globalization, but loses manufacturing in the later stage of globalization. When losing manufacturing, the large country might be worse off. Thus, the large country might have an incentive to implement welfare-maintaining policies to prevent a loss of manufacturing. All of these results can be explained by market sizes.
KW - Agglomeration
KW - Industry/welfare maintaining policy
KW - Market size
KW - Middle-sized country
KW - Non-constant wages
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U2 - 10.1016/j.jinteco.2017.12.003
DO - 10.1016/j.jinteco.2017.12.003
M3 - Article
AN - SCOPUS:85039694804
SN - 0022-1996
VL - 111
SP - 34
EP - 60
JO - Journal of International Economics
JF - Journal of International Economics
ER -