EXPORT VARIETY AND INTRA-INDUSTRY TRADE: THEORETICAL AND EMPIRICAL EVIDENCE

Yoko Oguro

Global Journal of Business Research, 2016, vol. 10, issue 3, 69-78

Abstract: This paper theoretically and empirically investigates the relationship between the number of product varieties and the extent of intra-industry trade (IIT). IIT provides more trade opportunities for countries in which differentiated products are produced. The model presented shows that the extent of bilateral IIT is higher the smaller the gap in the number of export varieties between two countries. The empirical analysis of Japan and twenty-five countries provides support for the theoretical model presented in this paper. The theory also shows that similar number of export varieties between two countries, that is, more IIT can be a tool to redress trade imbalance between two countries. The policy implication of the results is that promoting higher product variety will increase the opportunity for IIT regardless of country specific effects

Keywords: Export Variety; Trade; Intra-Industry Trade (search for similar items in EconPapers)
JEL-codes: F00 F10 F14 F19 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:ibf:gjbres:v:10:y:2016:i:3:p:69-78

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