Home Market Effect

No, not the effect on your waistline of having all your food delivered to your couch. And not the extra stuff you can buy since you started selling your hemp bracelets on Etsy.

The home market effect is an economic hypothesis that predicts that countries which have a large internal market for a product will also become a large exporter. The large home market combines with economies of scale and network effects to make it advantageous to concentrate production in these nations.

People in Sardinania love sardines. They eat sardines for every meal. Sardine omlettes for breakfast. Sardine sandwiches for lunch. Sardine tartar for dinner. Sardine cake for desert.

Because of the strong home market, Sardinania becomes a major exporter of sardines as well. Since they're making all those sardines anyway, they might as well make some extra for the foreign market.

The Home Market Effect provides an alternative model of foreign trade, as compared to ones rooted in the concept of competitive advantage.