RECENT-EVIDENCE ON DETERMINANTS OF INTRAINDUSTRY TRADE

This paper provides recent evidence on determinants of intra-industry trade for the United States. Results do not support the role of scale economies in explaining intra-industry trade. Product differentiation and degree of standardization, categorical aggregation, non-tariff barriers, and international transportation costs are important determinants of intra-industry trade. The overall explanatory power of the estimated model is shown to increase over time, stressing the importance of using recent trade flow data to test propositions concerning determinants of intra-industry trade.