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Univariate Classification of Differentiated International Markets

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  • D M Hanink
  • R G Cromley

Abstract

Hotelling initiated the use of spatial analogies in assessing market differentiation. In this paper, this line is followed to analyze differentiated international markets. Most of the economies in the world are arrayed as if they are a continuum of points of demand. In this paper, this continuum of demand points is partitioned into homogeneous segments by use of a classification algorithm that minimizes within-group variation. The criteria used for classifying are two indicators of market overlap that have been suggested as important by the new trade theory, proximity of gross national product (GNP), and proximity of per capita GNP. Several of the derived market partitions are compared with other classifications of international markets in the form of existing and planned geographically discriminatory trade arrangements.

Suggested Citation

  • D M Hanink & R G Cromley, 1993. "Univariate Classification of Differentiated International Markets," Environment and Planning A, , vol. 25(3), pages 409-424, March.
    • Handle: RePEc:sae:envira:v:25:y:1993:i:3:p:409-424
    DOI: 10.1068/a250409
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    References listed on IDEAS

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    1. Ali M. El-Agraa, 1989. "The Theory and Measurement of International Economic Integration," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-10203-7, March.
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    6. Wonnacott, Paul & Wonnacott, Ronald, 1981. "Is Unilateral Tariff Reduction Preferable to a Customs Union? The Curious Case of the Missing Foreign Tariffs," American Economic Review, American Economic Association, vol. 71(4), pages 704-714, September.
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