Another Empirical Look at the Theory of Overlapping Demands - Un Altro Sguardo Empirico alla Teoria delle Overlapping Demands

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Subject: LCSH

International trade--East Asia

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Linder’s theory of overlapping demands suggests that international trade in manufactured goods will be stronger between countries with similar per capita income levels. In this paper, we test the Linder hypothesis for five East Asian countries using panel data for five years. In addition to including bilateral trade data for these countries, we include their bilateral trade data with their other major trading partners. A modified gravity model is developed for this purpose. The model is first estimated for each year in the sample. In addition, a panel data set is constructed and estimated using a fixed-effects estimator. The overall results of our estimations are quite robust and do not provide support for Linder’s hypothesis.


This article was published in Economia Internazionale / International Economics. Economia Internazionale is also indexed in RePEc archives at https://ideas.repec.org/s/ris/ecoint.html with full text papers available for free from 2005 to 2017. This paper may be found at https://ideas.repec.org/a/ris/ecoint/0610.html

Publisher Citation

Dhakal, Dharmendra & Pradhan, Gyan & Upadhyaya, Kamal P., 2011. "Another Empirical Look at the Theory of Overlapping Demands - Un altro sguardo empirico alla teoria delle overlapping demands," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 64(1), pages 103-113.