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| Topic: |
Business
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| Number of pages / Number of words: |
26 / 7221 |
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Horizontal IIT is explained by economies of scale in the presence of product differentiation and imperfect competition. Vertical IIT is the exchange of commodities differentiated by quality. The explanations for vertical IIT were sought without recourse to economies of scale by Falvey (1981), Falvey and Kierzkowski (1987), and Falm and Helpman (1987)...
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Economies of scale is a critical element of the model of vertical IIT developed by Shaked and Sutton (1984). In general, these models predict the pattern of IIT along the lines similar to the pattern of inter-industry trade predicted in the standard trade model, according the central role to factor endowment differences...
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