151. VERTICAL AND HORIZONTAL INTRA-INDUSTRY TRADE BETWEEN THE U.S. AND NAFTA PARTNERS.
- Author
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EKANAYAKE, E. M., VEERAMACHENENI, BALA, and MOSLARES, CARLOS
- Subjects
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INTRA-industry trade , *FREE trade , *PRODUCT differentiation , *PRODUCT quality ,NORTH American Free Trade Agreement - Abstract
The main objectives of this paper are to (a) explain the extent of vertical and horizontal intra-industry trade in the United State's foreign trade with the North American Free Trade Area (NAFTA), and (b) identify the industry-specific determinants of vertical and horizontal intra-industry trade. One of the main findings is that the observed increase in intra-industry trade between the United States and NAFTA is almost entirely due to two-way trade in vertical differentiation. Another important finding is that the share of horizontal intra-industry trade has increased significantly during this period, although vertical intra-industry trade continued to be dominant in the U.S.-NAFTA IIT Trade. Among the industry-specific variables, product differentiation, vertical product differentiation, and product quality differences are found to have a positive effect on all three types of IIT shares. Industry concentration and industry size are found to have a negative and statistically significant effect on all three types of IIT share. [ABSTRACT FROM AUTHOR]
- Published
- 2009