Horizontal and Vertical Intra-industry Trade

Dutta, Sourish (2022): Horizontal and Vertical Intra-industry Trade.

Abstract

From the beginning of the 1980s, the first theoretical analysis of intra-industry trade showed that the determinants and consequences of this type of trade are different, depending on whether the traded products differ in quality. When the products are subject to intra-industry trade between two countries with distinct quality, this trade is vertically differentiated. Otherwise, it is called horizontal differentiation. There is a method for distinguishing intra-industry trade between two countries in vertical differentiation from those in horizontal differentiation. This method compares the unit value of exports to that of imports for each industry's intra-industry trade. It considers the intra-industry trading carried out in this industry as vertical differentiation when the unit value of exports differs significantly from that of imports.

• Item Type: MPRA Paper
• Language: English
• Keywords: Intra-Industry Trade, Horizontal Differentiation, Vertical Differentiation
• Subjects: F - International Economics > F1 - Trade > F10 - General; F - International Economics > F1 - Trade > F11 - Neoclassical Models of Trade; F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies ; Fragmentation; F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade

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