A Cross-Section Analysis of Intra-Industry Trade in the U.S. Processed Food and Beverage Sectors

Abstract

This paper analyzes the determinants of variation across industries in levels of intra-industry trade (IIT) for a sample of thirty-six U.S. processed food and beverage industries in 1987, previous studies of intra-industry trade having focussed on industry characteristics in the manufacturing sectors. The determinants predicted by IIT theory are measures of product differentiation, economies of scale, and imperfect competition; the results of this analysis indicate that IIT variation across the food and beverage industries is positively related to product differentiation, economies of scope, and similarity of tariff barriers among trade partners, but negatively related to industry concentration.

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