|Table of Contents|

Study on the differences of big market effects in China and the U.S. from the perspective of trade costs(PDF)

《长安大学学报（社科版）》[ISSN:1671-6248/CN:61-1391/C]

Issue:
2025年02期
Page:
48-66
Research Field:
国际经济与贸易
Publishing date:
2025-05-30

Info

Title:
Study on the differences of big market effects in China and the U.S. from the perspective of trade costs
Author(s):
SUI Yuehong;  HAO Danyang
(Belt and Road Regional Standardization Research Center, China Jiliang University,Hangzhou 310018, Zhejiang, China)
Keywords:
international economics and trade;  trade cost;  home market effect;  heterogeneous stochastic frontier gravity model;  big market in China and the U.S.;  comparative advantage
PACS:
F11; F75; F74
DOI:
-
Abstract:
To study the big market effects in China and the United States from the perspective of trade costs and their differences, this study adopts the home market effect framework and proposes several hypotheses: an inverted U-shaped relationship between national economic scale and exports; a two-sided sorting spatial effect of enterprise heterogeneity; and the dominant roles of comparative advantage and big market effects in driving exports. Using bilateral trade data from China and the U.S. with 125 global trade partners from 2001 to 2021, and applying a heterogeneous stochastic frontier gravity model, the study finds that after excluding the influence of trade inefficiencies the U.S. big market effect drives import expansion, whereas China has not achieved any significant type of big market effect. China's export growth has been primarily driven by its capital-intensive comparative advantage. Quantile regression results show that the additional tariffs imposed during the Trump administration reversed the U.S. big market-driven import effect into an export effect, enhancing export efficiency. In contrast, China shifted toward exporting goods on a smaller scale or with lower efficiency. These dynamics suggest differentiated future pathways for China and the U.S. in global value chains, easing bilateral trade frictions. The study concludes that both China and the U.S. are beneficiaries of globalization, forming complementary industrial chain relationships in capital and intermediate goods trade, while remaining competitors mainly in consumer goods. Policy recommendations include strengthening domestic regulation and international coordination, guarding against economic volatility, diversifying trade partners and sustaining export growth, and emphasizing the localization and diversification of small and medium-sized enterprises.

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Last Update: 2025-05-30