Evaluating the effect of intra-industry trade on the bilateral trade productivity for petroleum products of Iran

Mehdi Yazdani and Hamed Pirpour

Energy Economics, 2020, vol. 86, issue C

Abstract: The rapid growth of energy consumption and the unequal distribution of energy resources have increased the concern for sustainable development in the face of deteriorating energy security. However, institutional arrangements associated with the energy market and market integration can improve the distribution of energy products and boost bilateral trade productivity in energy products. Furthermore, intra-industry trade (IIT) can increase the level of market integration among trading partners through expanding vertical relationships among them. Thus, the aim of this study is to evaluate the effect of IIT on bilateral trade productivity. Hence, this study tries to identify the determinants of bilateral trade flows of crude oil and petroleum products among Iran and its major partners using the Poisson pseudo-maximum-likelihood (PPML) method during 1997–2016. Then, the bilateral trade productivity of the selected products will be calculated using the Malmquist index. Finally, the effect of IIT on the bilateral trade productivity among Iran and its partners will be evaluated using panel data method. Based on the results, the gross domestic product (GDP) per capita, the difference of oil reserves, the access to sea, and the IIT have positive effects on the bilateral trade flows, while the effects of transportation costs and economic sanctions are negative. Also, the impact of IIT on the bilateral trade productivity is positive.

Keywords: IIT; Bilateral trade productivity; Crude oil and petroleum products; PPML; Malmquist index (search for similar items in EconPapers)
JEL-codes: C23 C67 F13 O47 Q43 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:86:y:2020:i:c:s0140988318300823

DOI: 10.1016/j.eneco.2018.03.003

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