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World trade concentration and product market segregation

Author

Listed:
  • Gnidchenko, A.

    (Center for Macroeconomic Analysis and Short-Term Forecasting; Institute of Economic Forecasting of the Russian Academy of Sciences, Moscow, Russia
    HSE University, Moscow, Russia)

Abstract

The article examines the link between countries' trade geographic concentration indices at the product markets, both ignoring and accounting for differentiation by partners. I apply CEPII BACI data on trade by 4-digit HS products for 2022. Concentration is interpreted as market power of supplying or purchasing countries, the difference between concentration by suppliers and purchasers is regarded as relative market power of suppliers, and the combination of high bilateral trade flows concentration and moderate or low unilateral trade flows concentration marks product market segregation. The rate of suppliers' dominance depends on export diversification (effective number of suppliers), with a negative sign, and on import diversification (effective number of markets) and the rate of purchasers' dominance, with a positive sign. Products are put into three clusters by the k-means method, relying on concentration indices and their linear combinations (relative market power of suppliers and product market segregation). High diversification is typical for the first cluster; for the second one, concentration by suppliers is high, while being moderate by purchasers; for the third cluster, concentration is high for both suppliers and purchasers, with the dominance of the market power of the latter.

Suggested Citation

  • Gnidchenko, A., 2025. "World trade concentration and product market segregation," Journal of the New Economic Association, New Economic Association, vol. 66(1), pages 36-53.
    • Handle: RePEc:nea:journl:y:2025:i:66:p:36-53
    DOI: 10.31737/22212264_2025_1_36-53
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    More about this item

    Keywords

    concentration; world trade; marker segregation; product;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis

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