Chapter 8: Intra-industry trade

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Presentation transcript:

Chapter 8: Intra-industry trade Charles van Marrewijk International Trade Chapter 8: Intra-industry trade

Intra-EU merchandise trade 8.1 EU merchandise trade flows in 2014 Rest of World 1,058 1,793 2,851 EU imports EU-28 Intra-EU merchandise trade 2,935 EU exports 1,077 Rest of World 1,858

GL 3-digit Grubel-Lloyd index GL 5-digit year 8.3 evolution of intra-industry trade; global weighted average, 1962-2006 0.5 0.4 GL 3-digit Grubel-Lloyd index 0.3 GL 5-digit 0.2 0.1 year 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006

8.4 deviation between assumed demand and reality assumption assumption reality reality assumption assumption reality reality

8.5 production function for a variety of manufactures

8.6 Dixit–Stiglitz optimal pricing Price MR demand A p operating profits, op MC C q Quantity

8.7 entry in the Dixit–Stiglitz model Price demand A A' p op ↓ C MC C' MR q’ q Quantity

8.8 intra-industry trade in the Krugman model Autarky Netherlands 7 mln labourers Production N = 14,000 Consumption Trade Netherlands 7 mln labourers Production N = 14,000 Consumption N = 24,000 Belgium 5 mln labourers N = 10,000 Belgium exports 7/12th of production Dutch exports 5/12th of production Autarky Belgium 5 mln labourers Production N = 10,000 Consumption

8.9 sector 87 exports; vehicles other than railway, tramway, 2014

Trade extents the market: love-of-variety gains 8.10 the Krugman interpretation . Final good 2 B Final good 1 Final good N . Final good 1 A Final good N Final good 2 Exports from B to A Exports from A to B Country A Country B Consumers country A Consumers country B Trade extents the market: love-of-variety gains

Trade extents the market: production externality gains 8.11 the Ethier interpretation . Intermediate 2 B Intermediate 1 Intermediate N . Intermediate 1 A Intermediate N Intermediate 2 Exports from B to A Exports from A to B Country A Country B Producers country A Consumers country A Producers country B Consumers country B Trade extents the market: production externality gains

8.12 top ten export sectors in China; 2-digit hs, billion USD, 2013

8.13a China total trade and sector 85 trade, 1992-2013

8.13b China total trade and sector 85 trade, 1992-2013

8.14 China; net exports in sub-sectors of electronics, per cent of total trade

8.15a China; imports of chips and exports of telephones, % of total trade

8.15b China; imports of chips and exports of telephones, % of total trade