On Gravity, Specialization and Intra‐industry Trade
This paper derives the necessary and sufficient condition for the simple gravity equation to hold: the market share of an exporting country is constant across all importing countries. Specialization is just one example satisfying this condition. It holds in a variety of situations where multiple producers compete with a homogeneous good.Further, this paper shows that the ratio of bilateral trade to the product of partner incomes is increasing in the extent of specialization and in the intensity of intra-industry trade. Since the relationship is not model-specific, the correlations among these variables do not support any specific model.
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Volume (Year): 19 (2011)
Issue (Month): 3 (08)
Pages: 494-508
| Handle: | RePEc:bla:reviec:v:19:y:2011:i:3:p:494-508 |
| Contact details of provider: | Web page: http://www.blackwellpublishing.com/journal.asp?ref=0965-7576
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References listed on IDEAS
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