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On Gravity,Specialization and Intra-industry Trade

E. Young Song ()

No 1007, Working Papers from Research Institute for Market Economy, Sogang University

Abstract: This paper derives the necessary and sufficient condition for the simple gravity equation to hold: the market share of an exporting country is constant across all importing countries. Specialization is just one example satisfying this condition. It holds in a variety of situations where multiple producers compete with a homogeneous good.Further, this paper shows that the ratio of bilateral trade to the product of partner incomes is increasing in the extent of specialization and in the intensity of intra-industry trade. Since the relationship is not model-specific, the correlations among these variables do not support any specific model.

Keywords: gravity; specialization; intra-industry trade; Cournot; Heckscher-Ohlin (search for similar items in EconPapers)
JEL-codes: F11 F12 (search for similar items in EconPapers)
Date: 2010-03
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ftp://163.239.156.99/wpaper/SEY_RIME_2010-07.pdf First version, 2010 (application/pdf)

Related works:
Journal Article: On Gravity, Specialization and Intra‐industry Trade (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:sgo:wpaper:1007

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