Determinants of the pattern of horizontal and vertical intra-industry trade: what can we learn from Portuguese data?

Abstract

We rely on vertical and horizontal differentiation models to study the cross-industry and cross-country determinants of portuguese intra-industry trade in 1997. We identify distinct factors for each type and the comparative advantage explanation for the vertical case. To confirm the robustness of the results we use alternative measures for a continuous dependent variable and re-estimate all equations with a Probit model. The probabilistic model takes into account the fact that we expect a relation between the existence of the explanatory variables and the existence of the phenomenon, but the way some of the factors impact is not a priori known.