Abstract: In the context of China’s foreign trade frictions continuing to escalate, to keep the stable development of foreign trade through the home market effect is a new idea that deserves attention at present. Improving the advantages of Internet and product quality in the trade process can be a significant factor affecting the formation and expansion of the home market effect. This paper sets out to put the three variables of Internet, product quality and home market effect into one trade analytical framework, then it further explains impacting mechanism of Internet and product quality on home market effect from the perspective of mathematical model. Based on the relative data of China and other 30 sample countries from 2006 to 2015, it is found through an empirical study that the improvement of China’s Internet advantages and product quality could promote the formation and expansion of the home market effect, and that the use of Internet in trade can significantly strengthen the promotion effect of product quality on the home market effect. The impact of Internet and product quality on the home market effect will be different along with the different product types and different development levels of the import countries (regions). Therefore, to strengthen the Internet trade construction and to try to improve product quality is the key to promote the formation and expansion of China’s home market effect, while the home market effect is an effective way to keep the stable development of China’s foreign trade.

Key words: internet trade; product quality; home market effect