Intra-tourism trade, income distribution and tourism endowment: an econometric investigation

Joseph Hanna, Loïc Lévi and Sylvain Petit ()

MPRA Paper from University Library of Munich, Germany

Abstract: Empirical investigation (Nowak et al., 2012) points out that vertical intra-industry trade (VIIT) in Europe is the dominant type of intra-industry trade (IIT) in the tourism sector. This article is the first in tourism literature to test separately the determinants of vertically and horizontally differentiated services, using the most recent models in the theory of IIT. We examine bilateral trade among all trading partners of the sample of European countries, covering the period from 2000 to 2008. We show that differences in gross domestic product per capita and the income-distribution overlap, as well as cultural proximity, are the most significant driving forces behind VIIT for European countries. Geographic distance has a negative effect, whereas specific tourism endowments and relative size of the economies are less conclusive. These results confirm theory predictions and most of the empirical findings related to the pattern of VIIT for the manufacturing sector. As expected, we find that determinants of VIIT cannot explain horizontal intra-industry trade in tourism. We suggest two alternative methods of estimation: generalized least squares logistic function and the fractional logit estimator. We conclude that there are common factors explaining IIT in the manufacturing and tourism trades.

Keywords: intra-tourism trade; income distribution overlap; bilateral tourism flows; vertical differentiation; fractional-logit (search for similar items in EconPapers)
JEL-codes: C31 F14 L83 (search for similar items in EconPapers)
Date: 2015-01
New Economics Papers: this item is included in nep-tur
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Citations: View citations in EconPapers (5)

Published in Applied Economics 21.47(2015): pp. 2184-2200

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Related works:
Working Paper: Intra-tourism trade, income distribution and tourism endowment: an econometric investigation (2015)
Working Paper: Intra-tourism trade, income distribution and tourism endowment: an econometric investigation (2013)
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