Spatial inequality and urban costs: Revisiting the home market effect
研究产品差异、运输成本和城市成本如何相互作用决定空间不平等，发现忽略城市成本会高估本土市场效应的存在，并揭示城市成本或运输成本变化对区域不平等和福利的影响。
Abstract This paper investigates how the interactions between product differentiation, transport costs, and urban costs determine the spatial inequality in a general‐equilibrium model. We shed light on the interrelation between different definitions of home market effect (HME) in literature. While the wages in the large region are always higher, the HME in industrial distribution occurs in a limited range of parameters, implying that the HME in factor price is more pervasive. Moreover, we show that the reverse HME is the more common outcome. It indicates that neglecting urban costs in theoretical methodologies tends to overestimate the existence of HME. We also disclose how a change in urban costs or transport costs affects regional inequalities and welfare.