Horizontal and Vertical Differentiation: Approaching Endogenous Measurement in Intra-industry Trade

Sourish Dutta

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arXiv · 2307.10660

Horizontal and Vertical Differentiation: Approaching Endogenous Measurement in Intra-industry Trade

Sourish Dutta

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Abstract

Studying intra-industry trade involves theoretical explanations and empirical methods to measure the phenomenon. Indicators have been developed to measure the intensity of intra-industry trade, leading to theoretical models explaining its determinants. It is essential to distinguish between horizontal and vertical differentiation in empirical analyses. The determinants and consequences of intra-industry trade depend on whether the traded products differ in quality. A method for distinguishing between vertical and horizontal differentiation involves comparing exports' unit value to imports for each industry's intra-industry trade. This approach has limitations, leading to the need for an alternative method.

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Sourish Dutta. 2023-08-31. Horizontal and Vertical Differentiation: Approaching Endogenous Measurement in Intra-industry Trade. https://arxiv.org/abs/2307.10660

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