Discussion Paper Details

Please find the details for DP10852 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: What Drives Home Market Advantage?

Author(s): Kerem Cosar, Paul L. E. Grieco, Shengyu Li and Felix Tintelnot

Publication Date: September 2015

Keyword(s): automobile industry, market segmentation and trade and foreign direct investment

Programme Area(s): Industrial Organization and International Trade and Regional Economics

Abstract: In the automobile industry, as in many tradable goods markets, firms usually earn their highest market share within their domestic market. The goal of this paper is to disentangle the supply- and demand-driven sources of the home market advantage. While trade costs, foreign production costs, and taste heterogeneity all matter for market outcomes, we find that a preference for home brands is the single most important driver of home market advantage - even after controlling for brand histories and dealer networks. Furthermore, we also find that consumers favor domestically producing brands regardless of the historical brand origin.

For full details and related downloads, please visit:

Bibliographic Reference

Cosar, K, Grieco, P, Li, S and Tintelnot, F. 2015. 'What Drives Home Market Advantage?'. London, Centre for Economic Policy Research.