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Horizontal and Vertical Differentiation: Approaching Endogenous Measurement in Intra-industry Trade

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  • Sourish Dutta

Abstract

Studying intra-industry trade involves theoretical explanations and empirical methods to measure the phenomenon. Indicators have been developed to measure the intensity of intra-industry trade, leading to theoretical models explaining its determinants. It is essential to distinguish between horizontal and vertical differentiation in empirical analyses. The determinants and consequences of intra-industry trade depend on whether the traded products differ in quality. A method for distinguishing between vertical and horizontal differentiation involves comparing exports' unit value to imports for each industry's intra-industry trade. This approach has limitations, leading to the need for an alternative method.

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  • Sourish Dutta, 2023. "Horizontal and Vertical Differentiation: Approaching Endogenous Measurement in Intra-industry Trade," Papers 2307.10660, arXiv.org, revised Aug 2023.
    • Handle: RePEc:arx:papers:2307.10660
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    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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