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

AKM Azhar () and Robert J R Elliott ()

Discussion Papers from Department of Economics, University of Birmingham

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.

Keywords: Intra-industry trade; adjustment costs; quality; product differentiation (search for similar items in EconPapers)
JEL-codes: F19 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Date: 2007-08
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Persistent link: http://EconPapers.repec.org/RePEc:bir:birmec:07-09

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