The Heckscher-Ohlin-Samuelson Model, The Linder Hypothesis and the Determinants of Bilateral Intra-Industry Trade

Theoretical rationales for the robust empirical relationships between the share of intraindustry trade between two countries and the average levels of, and inequalities between, their GDPs, per capita GDPs, and tariffs have either varied or not been demonstrated formally within a unified analytical framework. This study motivates theoretically the relationships between these six determinants, as well as the average level of, and inequality between, two countries' capital-labor endowment ratios and their share of intraindustry trade. Regression analysis supports, among other results, the presence of both demand and supply roles for per capita income influencing intraindustry trade. Copyright 1990 by Royal Economic Society.

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