Intra-industry trade index The intra industry trade index of country i with country j for product k is measured as follows: β = , 1 2 + β’ If the index is = 0 no intra-industry trade is recorded β’ If the index is = 1 import flow is almost equal to export flow
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Intra-industry trade index
The intra industry trade index of country i with country j for product k is measured as follows:
β’ If the index is = 0 no intra-industry trade is recorded
β’ If the index is = 1 import flow is almost equal to export flow
Horizontal and verticaldifferentiationTwo goods are differentiated good if they are substitutes butnot perfect substitutes.
1. Horizontal: Goods are different for certain characteristicsbut at the same price some consumers will buy one andsome will buy other, it really depends on theirpreferences. Example: Pepsi and Coca Cola.
2. Vertical: Goods are different and all consumers wouldprefer one to the other if they were sold at the sameprice. Goods are qualitatively different, so the choice alsodepends on consumer purchasing power. Example:restaurant and fast-food.
Quality Comparition β Unit ValueTo compare goodβs characteristic across countries, we assume that quality can beinferred from cross country price differences
β’ We introduce the definition of Unit Value (UV) as follows
β’ Link to Eurostat data: International trade in goods
β’ Click on βInternational trade in goods - Detailed dataβ
β’ Click on βEU trade since 1988 by SITCβ (Data Explorer)β’ Reporter: EU28 (European Union 28)β’ Partner: China, Russian Federation, United Statesβ’ Product(5 digit SITC code): 26130, 26340, 65221, 71211β’ Period: jan-dec 2016β’ Indicators: Value in Euros and quantity (100 kg)