Marginal Intra-Industry Trade: Towards a Measure of Non-Disruptive Trade Expansion

Marius Brülhart

Chapter 7 in Frontiers of Research in Intra-Industry Trade, 2002, pp 109-130 from Palgrave Macmillan

Abstract: Abstract When Verdoorn (1960) found that the formation of a customs union among the Benelux countries had stimulated large, two-way trade flows of similar products, and Drèze (1961) discovered the same phenomenon in the fledgling six-nation EEC, economists took note for one main reason:adjustment costs. Instead of inter-sectoral specialization according to countries’ comparative advantage, the national economies seemed to preserve their broad industrial structures and to specialize predominantly at the intra-sectoral level. A ‘smooth adjustment hypothesis’ (SAH) soon became firmly rooted in economic thinking, according to which intra-industry trade (IIT) expansion generally entails lower adjustment costs than does inter-industry trade.

Keywords: Trade Flow; Adjustment Cost; Intraindustry Trade; Trade Imbalance; Marginal Trade (search for similar items in EconPapers)
Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-28598-9_7

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DOI: 10.1057/9780230285989_7

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