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How much have been the export products changed from homogeneous to differentiated? Evidence from China, Japan, and Korea

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  • KANG, Kichun

Abstract

Many international trade theories and evidence suggest that trade in homogeneous and differentiated goods is different, and trade performance depends significantly on the extent of product differentiation. First this paper classifies the three countries' export products using Rauch's [Rauch, J. (1999). Networks versus markets in international trade. Journal of International Economics, 48, 7-35] classification scheme. This paper suggests a sophisticated technique to obtain the extent of product differentiation in a country's export, implied by Dixit and Stiglitz [Dixit, A., & Stiglitz, J. (1977). Monopolistic competition and optimum product variety. The American Economic Review, 67, 297-308] model in which the smaller is the elasticity of substitution between varieties the greater is the extent of product differentiation. This is an attempt to identify the extent of product differentiation in each country's export basket by estimates of the elasticity of substitution. The estimated elasticities of substitution vary across countries. The most interesting empirical finding is that the China's export structure has been rapidly shaped into differentiated products. However the extent of product differentiation in Japan and Korea's exports has relatively less varied.

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Bibliographic Info

Article provided by Elsevier in its journal China Economic Review.

Volume (Year): 19 (2008)
Issue (Month): 2 (June)
Pages: 128-137

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Handle: RePEc:eee:chieco:v:19:y:2008:i:2:p:128-137

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Web page: http://www.elsevier.com/locate/chieco

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Cited by:
  1. Arita, Shawn & Tanaka, Kiyoyasu, 2012. "Heterogeneous multinational firms and productivity gains from falling FDI barriers," IDE Discussion Papers 324, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  2. Arita, Shawn & Tanaka, Kiyoyasu, 2011. "Simulating heterogeneous multinational firms," IDE Discussion Papers 296, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  3. Wei Liao & Kang Shi & Zhiwei Zhang, 2010. "Vertical Trade and China's Export Dynamics," Working Papers 102010, Hong Kong Institute for Monetary Research.
  4. Arita, Shawn & Tanaka, Kiyoyasu, 2013. "FDI and investment barriers in developing economies," IDE Discussion Papers 431, Institute of Developing Economies, Japan External Trade Organization(JETRO).

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