Abstract

Sutton (1991, 1998) proves that the home market effects would reverse with the assumption of the labor requirements with endogenous sunk costs. Departing from the original Helpman-Krugman modeling assumptions, we introduce the endogenous sunk costs of production to trading partners, and show that home market effects will be offset but not reverse, a result opposite of Sutton (1991, 1998).

This work is licensed under a Creative Commons Attribution 4.0 License.