Linder Hypothesis and Vertical Intra-industry Trade: An Empirical Case of Cosmetic Industry in China

Duc Niem Le ()
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Duc Niem Le: Department of Economics, Tay Nguyen University, Vietnam.

No 17, Working Papers from Development and Policies Research Center (DEPOCEN), Vietnam

Abstract: In this paper, we tested if country similarity positively affects the index of vertical intra-industry trade share (VIIT), given that the lower developed country is bigger in size. By using the trade data of the cosmetic industry in China, we found that VIIT is higher when China trades with a country similar in size or similar in level of economic development. This finding suggests that perhaps recent papers failed to derive any support for Linder Hypothesis because their model settings did not take the asymmetric impact of relative country size into account.

Keywords: Linder Hypothesis; Country Similarity; and Intra-Industry Trade (search for similar items in EconPapers)
JEL-codes: F12 L13 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:dpc:wpaper:1712

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