Citation
Discussion Paper Details
Please find the details for DP1959 in an easy to copy and paste format below:
Full Details | Bibliographic Reference
Full Details
Title: Intra-Industry Trade and the Single Market: Quality Matters
Author(s): Lionel Fontagné, Michael Freudenberg and Nicolas Péridy
Publication Date: September 1998
Keyword(s): European Integration, Intra-Industry Trade, Product Differentiation and unit values
Programme Area(s): International Trade and Regional Economics
Abstract: Analysing data on values and unit values of bilateral trade flows at a very detailed level (some 10,000 product items), we examine the nature of intra-EC trade over the period 1980-94, identify its general determinants and then estimate the specific impact of the Single European Market programme. Trade patterns are identified by breaking up total trade into three trade types: one-way (i.e. inter-'industry') trade, two-way (i.e. intra-'industry') trade in horizontally differentiated products, and two-way trade in vertically differentiated products. One of the main findings is that the observed increase in intra-'industry' trade in Europe is almost entirely due to two-way trade in vertical differentiation: thus, the 1980-94 period is characterized by a increasing specialization of countries along ranges of qualities within products, suggesting a 'qualitatively' division of labour in Europe. General determinants as well as direct and indirect effects of the single market in this evolution are assessed with an econometric model integrating country, industry and integration variables. We conclude that the first years of the Single market have neither validated the optimistic scenario entailed in ex-ante studies, nor led to a more pronounced inter-industry specialization of European members potentially associated with cohesion costs. Adjustments have taken place within industries, on the quality spectrum.
For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1959
Bibliographic Reference
Fontagné, L, Freudenberg, M and Péridy, N. 1998. 'Intra-Industry Trade and the Single Market: Quality Matters'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1959