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Endowment Differences And The Composition Of Intra-Industry Trade, Manuel Cabral, Rodney Falvey, Chris Milner
Endowment Differences And The Composition Of Intra-Industry Trade, Manuel Cabral, Rodney Falvey, Chris Milner
Rodney Falvey
The empirical relationship between differences in endowments and different types of trade is investigated in this paper. Although net trade (NT) and vertical intra-industry trade (IIT) are both broadly viewed as reflecting endowment differences, we suggest that there will be systematic differences in the way their shares of trade adjust as endowment differences become larger. Empirical evidence for European Union trade with its 52 major trading partners confirms this. The share of horizontal IIT (net trade) decreases (increases) for all increases in absolute endowment differences, but the share of vertical IIT can both increase and decrease with increases in endowment …
Does Trade Weaken Product Quality Standards, Katia Berti, Rodney E. Falvey
Does Trade Weaken Product Quality Standards, Katia Berti, Rodney E. Falvey
Rodney Falvey
In this paper we investigate the effects of trade on the national minimum quality standards applied by two trading partners. We employ a simple partial equilibrium model in which national regulators set a minimum quality standard for a product whose quality is unobservable to consumers prior to purchase. Both producers and consumers can benefit from a minimum standard, but the former prefer a lower standard to the latter. Because producers are organised and consumers are not, the standards set by national regulators will tend to unduly favour producer interests. As always, trade changes the balance of consumer and producer interests …