Local Market Effects, Factor Endowment and the Relative Scale of Wooden Furniture Trade in China

Based on the wooden furniture trade data between China and 16 major wooden furniture trading partners from 1992 to 2019, this paper empirically analyzes the influences of local market effects and factor endowment advantage on the relative scale of wooden furniture trade. The results show that the local market effects have an important impact on the relative scale of wooden furniture trade, and have surpassed the traditional factor endowment advantage, and become the main driving force to promote the growth of trade scale. This conclusion also holds true across various subdivisions of wooden furniture. Therefore, leveraging the mechanisms of local market effects, it is possible to foster domestic demand and reduce the comprehensive trade costs of furniture products, thereby promoting a virtuous cycle between the development of furniture industry and the improvement of domestic residents' living standards, and ultimately enhancing the local market effects and driving the development of international trade of furniture.