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The Economics of Intra-Industry Trade : A Survey

Published online by Cambridge University Press:  17 August 2016

P.K.M. Tharakan
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The analysis of intra-industry trade, as it is understood now, was born almost by accident. In his study of the changes in the pattern of intrabloc trade of the Benelux Union, Verdoorn (1960) calculated the bilateral trade ratios of a sample of 121 products at comparable levels of international trade classification, for two different points in time. He noticed that the number of the extreme values of the ratios had been reduced while their median increased since the formation of the Benelux Union. From this he inferred that specialization, if it did accompany the intra-bloc trade, was to be found within rather than between the different categories of trade. He also argued that the rather large variance of the price differentials found for the Dutch and BLEU bilateral export prices indicated, in the absence of trade obstacles, a high degree of product differentiation and corroborated the trend towards intra-industry specialization. These findings, tucked away into seven brief sentences in the text of Verdoorn’s (1960) article did not immediately attract attention as “new territory”.

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Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 47 , Issue 3-4 , September 1981 , pp. 259 - 290
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1981 

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References

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