Ubiquitous inequality: The home market effect in a multicountry space |
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| Institution: | 1. Graduate School of Information Sciences, Tohoku University, Sendai, 980-8579, Japan;2. School of Management, University of Chinese Academy of Sciences, Beijing, 100190, China;1. CNRS-University of Cergy-Pontoise (THEMA, UMR 8184), France;2. CNRS-Paris School of Economics (PjSE, UMR 8545), France;1. Korea University, Republic of Korea;2. University of Exeter, United Kingdom;1. Departamento de Análisis Económico and ERI-CES, University of Valencia, Facultad de Economía, Campus dels Tarongers, 46022 Valencia, Spain;2. D. Mètodes Quantitatius i Teoria Econòmica and Instituto Desarrollo Social y Paz (IUDESP), Universitat d’Alacant, Spain |
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| Abstract: | We show that spatial inequalities in an economic space of multiple countries in terms of both nominal income and real income are ubiquitous in the sense that they appear when countries are differentiated by population only. A new trade theory model is constructed without any freely traded homogeneous good, so that we can examine the home market effect (HME) and the non-monotonic relation between income inequalities and globalization. Meanwhile, there are three HME definitions for a two-country space in terms of firm share, labor wage, and trade pattern. The first two remain applicable in a multicountry space, and they are shown to be equivalent. However, a natural extension of the third is not equivalent. |
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| Keywords: | Spatial inequality Globalization Home market effect Multicountry |
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