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Scale Economies and the Volume of Trade

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Harrigan, James

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Abstract

This paper offers a theoretical explanation of why previous attempts to statistically explain intraindustry trade have been unsuccessful and proposes an econometric approach that tests the implications of the monopolistic competition model for the volume of trade. Using disaggregated data on 1983 manufacturing trade within the OECD, the paper finds strong evidence that bilateral imports depend systematically on the exporting country's output and somewhat weaker evidence that the volume of trade is higher in sectors with larger scale economies. Copyright 1994 by MIT Press.

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Publisher Info
Article provided by MIT Press in its journal Review of Economics & Statistics.

Volume (Year): 76 (1994)
Issue (Month): 2 (May)
Pages: 321-28
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Handle: RePEc:tpr:restat:v:76:y:1994:i:2:p:321-28

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  1. Donald R. Davis & David E. Weinstein, 1996. "Does Economic Geography Matter for International Specialization?," NBER Working Papers 5706, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Johan Torstensson, 1998. "Country size and comparative advantage: An empirical study," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 134(4), pages 590-611, December. [Downloadable!] (restricted)
  3. James Harrigan, 2001. "Specialization and the volume of trade: do the data obey the laws?," Staff Reports 140, Federal Reserve Bank of New York. [Downloadable!]
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  4. James E. Rauch, 1996. "Networks versus Markets in International Trade," NBER Working Papers 5617, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Alessandra Casella & James E. Rauch, 1997. "Anonymous Market and Group Ties in International Trade," NBER Working Papers 6186, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  6. Donald R. Davis & David E. Weinstein, 1998. "Market Access, Economic Geography, and Comparative Advantage: An Empirical Assessment," NBER Working Papers 6787, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Joan A. Martín & Vicente Orts, 2001. "A two-stage analysis of monopolistic competition models of intraindustry trade," Investigaciones Economicas, Fundación SEPI, vol. 25(2), pages 315-333, May. [Downloadable!]
  8. Rolf Weder, 2003. "Comparative home-market advantage: An empirical analysis of British and American exports," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 139(2), pages 220-247, June. [Downloadable!] (restricted)
  9. Federico Trionfetti, 2001. "Using home-biased demand to test trade theories," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 137(3), pages 404-426, September. [Downloadable!] (restricted)
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