The Economic Journal · 1995 · 515 citations · 18 references
Social SciencesBusiness EconomicsEconomicsIndustrial OrganizationInternational EconomicsInternational TradeComparative AdvantageCross-border TradeCross-border TransactionsTrade GoodsHorizontal Product DifferentiationIndustry CharacteristicsIndustry ClassificationIndustry Comparative AnalysisInter-industry TradeIntra-industry TradeTrade In Differentiated Products
A large theoretical literature has emerged directed at explaining the presence of intra-industry trade (IIT). One of the distinctions which comes out of these models is that between horizontal IIT (where goods are differentiated by attributes) and vertical IIT (where goods are differentiated by quality). In this paper horizontal and vertical IIT in UK trade are disentangled using a unit value dispersion criterion and a range of industry characteristics. The paper not only points up the relative importance of vertical and horizontal IIT in the United Kingdom, it also demonstrates how a failure to separate them out can impact on the interpretation of empirical results.
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