Intra-Industry Trade and Revealed Comparative Advantage: An Inverted-U Relationship

Abstract

This paper investigates the relationship between all types of intra-industry trade (IIT) and comparative advantage. The paper finds strong evidence of an inverted-U relationship.The results also suggest that relative autarky costs is a common determinant for any type of IIT, which contradicts the prediction made by theory for separating the determinants of horizontal and vertical IIT.intra-industry trade; horizontal intra-industry trade; vertical intra-industry trade; comparative advantage.