Quality Product differentiation in Cee-Eu Intra-Industry Trade
In this paper we compute price/quality gap indicators to measure vertical intra-iundustry trade (VIIT) in EU markets at 3-digit NACE industry level. These indicators are then used to test some hypotheses relative to the determinants of the quality of trade of Central and Eastern European countries (CEECs). Two underlying models of VIIT are tested: a neo-H-O model (Falvey, 1981; Falvey- Kierzkowski, 1987), based on factor endowment, and an “economic geography” model, based on market size and economic integration (Greenaway-Torstensson, 1997). The explanatory variables (proxies for human capital, physical capital, market size and market integration) affect the dependent variable (unit-value differences) with relevant and significant coefficients. The negative sign for the variable human capital, interacted with the dummy for CEECs, suggests the existence of comparative disadvantages in the high-skill sectors for these countries. Moreover, the lower market size of CEECs could strengthen their disadvantage in high quality segments of production. However, the geographic proximity to the core of Europe and the integration process, which are strongly correlated with high quality trade, could make faster the process of catching up.
|Date of creation:||Dec 1998|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +39 06 57114612
Fax: +39 06 57114771
Web page: http://host.uniroma3.it/dipartimenti/economia/it/Email:
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lionel Fontagné & Michaël Freudenberg, 1997. "Intra-Industry Trade: Methodological Issues Reconsidered," Working Papers 1997-01, CEPII research center.
When requesting a correction, please mention this item's handle: RePEc:rtr:wpaper:0007. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Telephone for information)
If references are entirely missing, you can add them using this form.