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Empirical Explanation of Vertical and Horizontal Intra-industry Trade in the UK: A Comment - Spiegazioni empiriche del commercio intra-industriale verticale ed orizzontale del Regno Unito: un commento


  • Celi, Giuseppe

    () (Università di Bari, Dipartimento di Scienze Economiche)


Recent developments in the literature on intra-industry trade (IIT) have remarked the importance of disentangling horizontal and vertical components in IIT. For example, Greenaway, Hine and Milner (GHM) have investigated the determinants of IIT in the UK and have shown that the approach which distinguishes vertical from horizontal IIT is worth pursuing in order to arrive at a more accurate interpretation of empirical evidence. This paper builds on GHM’s methodology whilst at the same time introducing some innovative features. The most significant is that the share of vertical differentiation in IIT is further divided into two components which are separately tested in the case of the UK: the part of vertical IIT composed of flows in which the quality of exports is higher than the quality of imports; the remaining part formed by flows in which exports appear to be downgraded in comparison with imports. This further distinction yields a more consistent specification of the expected relationship between the proxy variable for quality differentiation and vertical intra-industry trade. / Recenti sviluppi della letteratura sul commercio intra-industriale (CII) hanno evidenziato l’importanza di separare la componente verticale da quella orizzontale nei flussi di CII. Ad esempio, Greenaway, Hine e Milner (GHM) hanno studiato le determinanti del CII del Regno Unito e hanno dimostrato che l’analisi separata delle due componenti (verticale ed orizzontale) porta ad una più accurata interpretazione dell’evidenza empirica. Questo lavoro sviluppa ulteriormente la metodologia proposta da GHM, introducendo alcuni elementi innovativi. Il più significativo consiste nell’ulteriore suddivisione della quota di commercio verticale in due componenti che sono separatamente analizzate nel caso del Regno Unito: la parte costituita da quei flussi commerciali in cui la qualità delle esportazioni è superiore a quella delle importazioni e la parte rimanente in cui si registra il contrario. Questa ulteriore distinzione genera una specificazione econometrica più coerente della relazione attesa tra la variabile indipendente che approssima la differenziazione qualitativa e il commercio intra-industriale verticale.

Suggested Citation

  • Celi, Giuseppe, 2010. "Empirical Explanation of Vertical and Horizontal Intra-industry Trade in the UK: A Comment - Spiegazioni empiriche del commercio intra-industriale verticale ed orizzontale del Regno Unito: un commento," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 63(1), pages 53-90.
  • Handle: RePEc:ris:ecoint:0588

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    References listed on IDEAS

    1. Giuseppe Celi, 2004. "Quality Differentiation, Vertical Disintegration and The Labour Market Effects of Intra-Industry Trade," CELPE Discussion Papers 86, CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy.
    2. Balassa, Bela & Bauwens, Luc, 1987. "Intra-industry Specialisation in a Multi-country and Multi-industry Framework," Economic Journal, Royal Economic Society, vol. 97(388), pages 923-939, December.
    3. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
    4. Falvey, Rodney E., 1981. "Commercial policy and intra-industry trade," Journal of International Economics, Elsevier, vol. 11(4), pages 495-511, November.
    5. David Greenaway & Chris Milner & Robert Elliott,, "undated". "UK Intra-Industry Trade with EU North and South: A Multi-Country and Multi-Industry Analysis," Discussion Papers 96/9, University of Nottingham, CREDIT.
    6. Lancaster, Kelvin, 1980. "Intra-industry trade under perfect monopolistic competition," Journal of International Economics, Elsevier, vol. 10(2), pages 151-175, May.
    7. Giuseppe Celi & Alasdair Smith, 1999. "Quality Differentiation and the Labour Market Effects of International Trade," CELPE Discussion Papers 50, CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy.
    8. Greenaway, David & Hine, Robert C & Milner, Chris, 1995. "Vertical and Horizontal Intra-industry Trade: A Cross Industry Analysis for the United Kingdom," Economic Journal, Royal Economic Society, vol. 105(433), pages 1505-1518, November.
    9. Johan Torstensson, 1991. "Quality differentiation and factor proportions in international trade: An empirical test of the Swedish case," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 127(1), pages 183-194, March.
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    More about this item


    Intra-industry Trade; North-South Trade; Vertical Product Differentiation; UK Trade;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade


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