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Evidence of Product Differentiation and Relative Quality in Italian Trade

Intra-Industry Trade implies similar trade specialisation and is often associated with product differentiation. Differentiation depends on either quality or characteristics and two-way flows can be divided accordingly. If quality matters, we can measure relative quality of exports and imports. Our objective is to apply this analysis to Italian trade with industrialised countries. Our results suggest a prevalence of two-way flows at the aggregate level. This finding hides sectoral and bilateral heterogeneity. Vertical flows prevail over horizontal flows in most sectors and for most countries. That reduces the competitive concerns linked to the similar specialisation. Finally, quality of Italian exports is lower than that of imports, but seems to be increasing.

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File URL: ftp://ftp.unibocconi.it/pub/RePEc/cri/papers/wp114.pdf
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Paper provided by KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy in its series KITeS Working Papers with number 114.

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Length: 28 pages
Date of creation: Jul 2000
Date of revision: Jul 2000
Handle: RePEc:cri:cespri:wp114
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  1. 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, vol. 130(1), pages 77-100, March.
  2. David Greenaway & Johan Torstensson,, . "Economic Geography, Comparative Advantage and Trade Within Industries: Evidence from the OECD," Discussion Papers 97/16, University of Nottingham, CREDIT.
  3. Lionel Fontagné & Michaël Freudenberg, 1997. "Intra-Industry Trade: Methodological Issues Reconsidered," Working Papers 1997-01, CEPII research center.
  4. Krugman, Paul R, 1981. "Intraindustry Specialization and the Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 959-73, October.
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