Intra-industry Trade and the Gravity Equation: A Cournot-Ricardo Approach

E. Young Song ()
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E. Young Song: Sogang University

East Asian Economic Review, 2000, vol. 4, issue 4, 35-58

Abstract: This paper shows that Cournot competition in segmented markets generate both intra-industry trade and the gravity equation. The paper also demonstrates that the gravity equation holds if and only if the market shares of an exporting country do not depend on the market where it sells. Thus, the widely accepted wisdom that specialization generates the force of gravity is not well grounded on theory.

Keywords: Intra-industry Trade; Gravity; Cournot (search for similar items in EconPapers)
JEL-codes: F11 F12 (search for similar items in EconPapers)
Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:ris:eaerev:0248

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