IDEAS home Printed from https://ideas.repec.org/p/bir/birmec/07-09.html
   My bibliography  Save this paper

On the Measurement of Changes in Product Quality in Marginal Intra-Industry Trade

Author

Listed:
  • A K M Azhar
  • Robert R J Elliott

Abstract

There is a long established thread of the international trade literature concerned with the measurement of intra-industry trade (IIT). Two distinct strands of the literature have developed: First, measures of marginal IIT that are concerned with the adjustment implications of volume-based changes in IIT; second, measures of vertical and horizontal IIT that are concerned with quality-based differences in IIT. This paper marries the two literatures to provide a new perspective on the smooth adjustment hypothesis debate and suggests the use of the marginal product quality index, a new measure of changes in quality in matched trade changes that complements dynamic measures of volume-based IIT.

Suggested Citation

  • A K M Azhar & Robert R J Elliott, 2007. "On the Measurement of Changes in Product Quality in Marginal Intra-Industry Trade," Discussion Papers 07-09, Department of Economics, University of Birmingham.
    • Handle: RePEc:bir:birmec:07-09
    as

    Download full text from publisher

    File URL: https://repec.cal.bham.ac.uk/pdf/07-09.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Falvey, Rodney E., 1981. "Commercial policy and intra-industry trade," Journal of International Economics, Elsevier, vol. 11(4), pages 495-511, November.
    2. Kishor Sharma, 2004. "Horizontal and vertical intra-industry trade in Australian manufacturing: does trade liberalization have any impact?," Applied Economics, Taylor & Francis Journals, vol. 36(15), pages 1723-1730.
    3. Lionel Fontagné & Michael Freudenberg & Guillaume Gaulier, 2006. "A Systematic Decomposition of World Trade into Horizontal and Vertical IIT," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(3), pages 459-475, October.
    4. AZHAR, Abdul K.M. & Elliott, Robert J.R. & Liu, Junting, 2008. "On the measurement of product quality in intra-industry trade: An empirical test for China," China Economic Review, Elsevier, vol. 19(2), pages 336-344, June.
    5. Robert J. R. Elliott & Joanne K. Lindley, 2006. "Trade, Skills and Adjustment Costs: A Study of Intra‐Sectoral Labor Mobility," Review of Development Economics, Wiley Blackwell, vol. 10(1), pages 20-41, February.
    6. Kamal Abd-el-Rahman, 1991. "Firms’ competitive and national comparative advantages as joint determinants of trade composition," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 127(1), pages 83-97, March.
    7. Manuel Cabral & Joana Silva, 2006. "Intra-Industry Trade Expansion and Employment Reallocation between Sectors and Occupations," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(3), pages 496-520, October.
    8. Stiglitz, Joseph E, 1987. "The Causes and Consequences of the Dependence of Quality on Price," Journal of Economic Literature, American Economic Association, vol. 25(1), pages 1-48, March.
    9. Marius Brülhart & Robert C. Hine (ed.), 1999. "Intra-Industry Trade and Adjustment," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-27173-3, December.
    10. Chonira Aturupane & Simeon Djankov & Bernard Hoekman, 1999. "Horizontal and vertical intra-industry trade between Eastern Europe and the European union," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 135(1), pages 62-81, March.
    11. David Greenaway & Robert Hine & Chris Milner & Robert Elliott, 1994. "Adjustment and the measurement of marginal intra-industry trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 130(2), pages 418-427, June.
    12. Peter B. Dixon & Jayant Menon, 1997. "Measures of Intra‐Industry Trade as Indicators of Factor Market Disruption," The Economic Record, The Economic Society of Australia, vol. 73(222), pages 233-247, September.
    13. repec:bla:obuest:v:61:y:1999:i:3:p:365-84 is not listed on IDEAS
    14. Marius Brülhart & Robert J. R. Elliott & Joanne Lindley, 2006. "Intra-Industry Trade and Labour-Market Adjustment: A Reassessment Using Data on Individual Workers," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(3), pages 521-545, October.
    15. Aiginger, Karl, 1997. "The Use of Unit Values to Discriminate between Price and Quality Competition," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 21(5), pages 571-592, September.
    16. Lionel Fontagné & Michaël Freudenberg, 1997. "Intra-Industry Trade: Methodological Issues Reconsidered," Working Papers 1997-01, CEPII research center.
    17. David Greenaway & Chris Milner & Robert J. R. Elliott, 1999. "UK Intra‐industry Trade with the EU North and South," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(3), pages 365-384, August.
    18. Marius Brülhart, 1994. "Marginal Intra-Industry Trade: Measurement and Relevance," Economics Technical Papers 942, Trinity College Dublin, Department of Economics.
    19. Cadot, Olivier & Faini, Riccardo & de Melo, Jaime, 1995. "Early trade patterns under the Europe Agreements: France, Germany and Italy," European Economic Review, Elsevier, vol. 39(3-4), pages 601-610, April.
    20. Marius Brülhart, 1994. "Marginal intra-industry trade: Measurement and relevance for the pattern of industrial adjustment," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 130(3), pages 600-613, September.
    21. Xiaoling Hu & Yue Ma, 1999. "International intra-industry trade of China," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 135(1), pages 82-101, March.
    22. José Blanes & Carmela Martín, 2000. "The nature and causes of intra-industry trade: Back to the comparative advantage explanation? The case of Spain," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(3), pages 423-441, September.
    23. repec:bla:ecorec:v:73:y:1997:i:222:p:233-37 is not listed on IDEAS
    24. Abdul Azhar & Robert Elliott, 2003. "On the measurement of trade-induced adjustment," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 139(3), pages 419-439, September.
    25. Abdul Azhar & Robert Elliott & Chris Milner, 1998. "Static and dynamic measurement of intra-industry trade and adjustment: A geometric reappraisal," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 134(3), pages 404-422, September.
    26. David Greenaway & Michelle Haynes & Chris Milner, 2002. "Adjustment, employment characteristics and intra-industry trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(2), pages 254-276, June.
    27. Clive Hamilton & Paul Kniest, 1991. "Trade liberalisation, structural adjustment and intra-industry trade: A note," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 127(2), pages 356-367, June.
    28. Marius Brülhart & Robert Elliott, 2002. "Labour-market effects of intra-industry trade: Evidence for the United Kingdom," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(2), pages 207-228, June.
    29. Krugman, Paul R, 1981. "Intraindustry Specialization and the Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 959-973, October.
    30. David Greenaway & Robert Hine & Chris Milner, 1994. "Country-specific factors and the pattern of horizontal and vertical intra-industry trade in the UK," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 130(1), pages 77-100, March.
    31. ERLAT Guzin & ERLAT Haluk, 2010. "Intra-Industry Trade and Labour Market Adjustment in Turkey," EcoMod2003 330700049, EcoMod.
    32. 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.
    33. David Greenaway & Johan Torstensson, 1997. "Back to the future: Taking stock on intra-industry trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 133(2), pages 249-269, June.
    34. Flam, Harry & Helpman, Elhanan, 1987. "Vertical Product Differentiation and North-South Trade," American Economic Review, American Economic Association, vol. 77(5), pages 810-822, December.
    35. Giuseppe Celi, 1999. "Vertical and Horizontal Intra-Industry Trade: What is the Empirical Evidence for the UK?," CELPE Discussion Papers 49, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    36. Abdul K. M. Azhar & Robert J. R. Elliott, 2006. "On the Measurement of Product Quality in Intra-Industry Trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(3), pages 476-495, October.
    37. Joakim Gullstrand, 2002. "Does the measurement of intra-industry trade matter?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(2), pages 317-339, June.
    38. Jayant Menon & Peter Dixon, 1997. "Intra-industry versus inter-industry trade: Relevance for adjustment costs," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 133(1), pages 164-169, March.
    39. repec:bla:reviec:v:8:y:2000:i:3:p:420-35 is not listed on IDEAS
    40. Nuno Crespo & Maria Fontoura, 2004. "Intra-industry trade by types: What can we learn from Portuguese data?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 140(1), pages 52-79, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Valerija Botrić, 2013. "Determinants of Intra-industry Trade between Western Balkans and EU-15: Evidence from Bilateral Data," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 6(2), pages 7-23, September.
    2. Azhar A. KM & Elliott Rob J. & Liu Junting, 2012. "Product Quality, Trade, and Adjustment: The China-ASEAN Experience," Global Economy Journal, De Gruyter, vol. 12(2), pages 1-28, June.
    3. Mastooreh Eshraghi & Normaz Wana Ismail, 2013. "Intra Industry Trade and Product Quality: China and Eight Developing Countries," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 12(1), pages 59-72, June.
    4. Naoto Jinji & Xingyuan Zhang & Shoji Haruna, 2010. "Trade Patterns and International Technology Spillovers:Theory and Evidence from Patent Citations," Discussion papers e-10-006, Graduate School of Economics Project Center, Kyoto University, revised Mar 2011.
    5. Jin Sun, 2021. "Do Higher‐Quality Regional Trade Agreements Improve the Quality of Export Products from China to “One‐Belt One‐Road” Countries?," Asian Economic Journal, East Asian Economic Association, vol. 35(2), pages 142-165, June.
    6. Abdul Azhar & Robert Elliott, 2011. "A Measure of Trade Induced Adjustment in Volume and Quality Space," Open Economies Review, Springer, vol. 22(5), pages 955-968, November.
    7. Ufuk Gunes Bebek, 2011. "Robustness of the Proposed Measures of Revealed Comparative Advantage," Studies in Economics 1121, School of Economics, University of Kent.
    8. Sakshi Aggarwal & Debashis Chakraborty, 2020. "Labour Market Adjustment and Intra-Industry Trade: Empirical Results from Indian Manufacturing Sectors," Journal of South Asian Development, , vol. 15(2), pages 238-269, August.
    9. Manuel Cabral & Joana Silva, 2006. "Intra-Industry Trade Expansion and Employment Reallocation between Sectors and Occupations," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(3), pages 496-520, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Abdul Azhar & Robert Elliott, 2011. "A Measure of Trade Induced Adjustment in Volume and Quality Space," Open Economies Review, Springer, vol. 22(5), pages 955-968, November.
    2. AZHAR, Abdul K.M. & Elliott, Robert J.R. & Liu, Junting, 2008. "On the measurement of product quality in intra-industry trade: An empirical test for China," China Economic Review, Elsevier, vol. 19(2), pages 336-344, June.
    3. Tadashi Ito & Toshihiro Okubo, 2016. "Product Quality And Intra-Industry Trade," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(04), pages 1-22, September.
    4. Azhar A. KM & Elliott Rob J. & Liu Junting, 2012. "Product Quality, Trade, and Adjustment: The China-ASEAN Experience," Global Economy Journal, De Gruyter, vol. 12(2), pages 1-28, June.
    5. Abdul Azhar & Robert Elliott, 2003. "On the measurement of trade-induced adjustment," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 139(3), pages 419-439, September.
    6. Luka, Oksana & Levkovych, Inna, 2004. "Intra-industry trade in agricultural and food products: the case of Ukraine," IAMO Discussion Papers 78, Leibniz Institute of Agricultural Development in Transition Economies (IAMO).
    7. Pittiglio, Rosanna, 2009. "The Intra-industry Trade for a Highincome Country: New Empirical Evidence for Italy," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 62(2), pages 233-254.
    8. Rosanna Pittiglio & Filippo Reganati, 2012. "Vertical intra-industry trade in higher and lower quality: a new approach of measuring country-specific determinants," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 4(1/2), pages 44-62.
    9. Fertő, Imre, 2006. "Vertikálisan és horizontálisan differenciált, ágazaton belüli kereskedelem az Európai Unió tejpiacán [Trade within vertically and horizontally differentiated industries on the milk market of the Eu," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 526-539.
    10. Sakshi Aggarwal & Debashis Chakraborty, 2021. "Which Factors influence Vertical Intra-Industry Trade in India? Empirical Results from Panel Data Analysis," Working Papers 2154, Indian Institute of Foreign Trade.
    11. repec:wsr:wpaper:y:2019:i:193 is not listed on IDEAS
    12. Mónica Rivera, 2014. "Trade patterns in the process of European integration: Evidence for the intraindustrial exchanges of a Mediterranean peripheral region," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(1), pages 227-249, January.
    13. Imre Ferto & Károly Attila Soos, 2008. "Marginal Intra-Industry Trade and Adjustment Costs - A Hungarian-Polish Comparison," CERS-IE WORKING PAPERS 0815, Institute of Economics, Centre for Economic and Regional Studies.
    14. Sakshi Aggarwal & Debashis Chakraborty, 2020. "Labour Market Adjustment and Intra-Industry Trade: Empirical Results from Indian Manufacturing Sectors," Journal of South Asian Development, , vol. 15(2), pages 238-269, August.
    15. Valerija Botrić, 2013. "Determinants of Intra-industry Trade between Western Balkans and EU-15: Evidence from Bilateral Data," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 6(2), pages 7-23, September.
    16. Luka, Oksana & Levkovych, Inna, 2004. "Intra-Industry Trade In Agricultural And Food Products: The Case Of Ukraine," IAMO Discussion Papers 14923, Institute of Agricultural Development in Transition Economies (IAMO).
    17. BELLINO, Antonella & CELI, Giuseppe, 2016. "The Migration-Trade Nexus in the Presence of Vertical and Horizontal Product Differentiation," CELPE Discussion Papers 137, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    18. Saeed Rasekhi & Saman Ghaderi, 2012. "Marginal intra-industry trade and adjustment costs: the case study of Iran’s manufacturing industries," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 4(1/2), pages 35-43.
    19. J. Hanna & L. L鶩 & S. Petit, 2015. "Intra-tourism trade, income distribution and tourism endowment: an econometric investigation," Applied Economics, Taylor & Francis Journals, vol. 47(21), pages 2184-2200, May.
    20. Roy, Jayjit, 2017. "On the environmental consequences of intra-industry trade," Journal of Environmental Economics and Management, Elsevier, vol. 83(C), pages 50-67.
    21. Jean-Jacques Nowak & Sylvain Petit & Mondher Sahli, 2012. "Intra-Tourism Trade in Europe," Tourism Economics, , vol. 18(6), pages 1287-1311, December.

    More about this item

    Keywords

    Intra-industry trade; adjustment costs; quality; product differentiation;
    All these keywords.

    JEL classification:

    • F19 - International Economics - - Trade - - - Other

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bir:birmec:07-09. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oleksandr Talavera (email available below). General contact details of provider: https://edirc.repec.org/data/debhauk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.