Economic Geography, Comparative Advantage and Trade within Industries: Evidence from the OECD

A large share of world trade, especially among the OECD countries, is twoway trade within industries, so called intra-industry trade. Despite this, few attempts have been made to examine why countries export some products with - in industries, whereas they import others. We examine this issue, by focusing on the shares of IIT that are vertical and horizontal and by examining price dis - persion. The regression results suggest that an abundant human capital endowment as well as a large domestic market increases the quality of OECD-countries’ manufacturing exports, thus of fering suppor t for comparative advantage models as well as newer geography models.