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<p>To investigate questions related to migration and trade, a model of regional or international development is created by altering Melitz and Ottaviano (Rev Econ Stud 75:295–316, 2008) to include a labor market. The model is then applied to analyze poverty traps and the home market effect. We find that in the spatial economics context of migration but no trade, poverty can persist unless population in one region of many is pushed past a threshold. Then growth commences. In the context of trade but no migration, the home market effect holds for a range of parameters, similar to previous literature. However, unlike previous literature, we find that if populations in the countries are large, the home market effect can be reversed.</p>

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Market size, trade, and productivity reconsidered: poverty traps and the home market effect

  • 期刊论文

  • 发表日期：

    2025年1月2日

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  • Marcus Berliant,
  • Takatoshi Tabuchi

摘要

To investigate questions related to migration and trade, a model of regional or international development is created by altering Melitz and Ottaviano (Rev Econ Stud 75:295–316, 2008) to include a labor market. The model is then applied to analyze poverty traps and the home market effect. We find that in the spatial economics context of migration but no trade, poverty can persist unless population in one region of many is pushed past a threshold. Then growth commences. In the context of trade but no migration, the home market effect holds for a range of parameters, similar to previous literature. However, unlike previous literature, we find that if populations in the countries are large, the home market effect can be reversed.