Trade within vertically and horizontally differentiated industries on the milk market of the European Union

The paper examines bilateral intra-industry trade (IIT) in the EU dairy products industry in 1993-2000, disentangling vertical from horizontal IIT and analysing the determinants of both IIT types. The results lend support to the contention that there are different determinants for horizontal and for vertical IIT. The GDP per capita variables show mainly expected and significant signs. The regression results are robust for different specifications and when alternative values to separate horizontal from vertical IIT are considered.