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Intra-industry trade and strategic interaction: Theory and evidence
By : Daniel M. Bernhofen, ELSEVIER (dbernhofen@vax.clarku.edu)
Created : 2010-07-01, with 1 files
Keyword : Intra,industry, trade, strategic, interaction, Theory,evidence
We conduct a theory-based empirical study of intraindustry trade in homogeneous
products.We derive an oligopolistic model of intra-industry trade, which is an extension of
the segmented market model of trade, initially proposed by [Brander, J. A., 1981,
Intra-industry trade in identical commodities, Journal of International Economics 11, 114].
The empirical implementations of the model are investigated in the context of the
petrochemical industry. Our analysis employs a unique data set containing detailed product-
and location-specific data on the petrochemical industries in Germany and the United States.
Allowing for different empirical specifications, we find that cross-product variations in
bilateral intra-industry trade of petrochemicals are well explained by the variables suggested
by the theoretical model. 1998 Elsevier Science B.V.
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