Rich countries trade more among themselves than with poor economies due to a closer match of exporter supply structures and importer preferences. In the literature, the closeness of supply and demand has traditionally been determined by the quality of products-as expressed in the Linder hypothesis. This paper examines an extension of the hypothesis by considering the extent of brand differentiation as another determinant of the closeness of supply and demand. The analysis employs information on international trademark registrations to test whether richer countries import more from countries exporting products of higher quality and greater brand differentiation. The hypothesis is confirmed in most consumer goods sectors.
All Science Journal Classification (ASJC) codes
- Economics, Econometrics and Finance(all)
- Linder hypothesis
- Product differentiation