Marginal intra-industry trade and adjustment costs: the case study of Iranâ€™s manufacturing industries
AbstractAccording to smooth adjustment hypothesis (SAH), intra-industry trade (IIT) has low adjustment cost compared with inter-industry trade. The purpose of this paper is to examine the hypothesis by using panel technique for Iranâ€™s manufacturing industries during 2002â€“2006. Comparing with other empirical studies, this paper has used marginal horizontal and vertical IIT as well as marginal intra-industry trade (MIIT) to test SAH. The obtained results do not support the mentioned hypothesis for MIIT. On the other hand, by distinguishing MIIT to marginal horizontal and vertical IIT, this hypothesis is confirmed for the former. This result is justifiable since marginal horizontal IIT is a change of IIT with similar factor intensity, whereas marginal vertical IIT is mainly based on differences in factor endowment.
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Bibliographic InfoArticle provided by Inderscience Enterprises Ltd in its journal Int. J. of Economics and Business Research.
Volume (Year): 4 (2012)
Issue (Month): 1/2 ()
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Web page: http://www.inderscience.com/browse/index.php?journalID==310
smooth adjustment hypothesis; horizontal trade; vertical trade; marginal trade; adjustment costs; Iran; manufacturing industry; panel data; inter-industry trade; factor intensity; factor endowment; economics; business research; intra-industry trade.;
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