A Clustering Analysis of the Effects of Import Penetration on Product Variety

Lynne Pepall

Oxford Economic Papers, 1988, vol. 40, issue 4, 655-70

Abstract: This paper uses clustering analysis to describe the effects of import penetration on product variety. The similarity of two goods is defined by the distance between them on the characteristics plane. If imports are not close substitutes for domestic goods, then the pattern of product clustering becomes less segmented. Alternatively, if imports are similar to domestic goods, then existing clusters become more densely packed with similar goods. This approach to studying the effects of imports on product variety is applied to the market for milling machine tools in Britain. Copyright 1988 by Royal Economic Society.

Date: 1988
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