A Cross-Section Analysis of Intra-industry Trade in the U.S. Processed Food and Beverage Sectors* by Darcy A. Hartman Research Associate Department of Agricultural Economics The Ohio State University Columbus, Ohio Dennis R. Henderson Professor Department of Agricultural Economics The Ohio State University Columbus, Ohio Ian M. Sheldon Associate Professor Department of Agricultural Economics The Ohio State University Columbus, Ohio Abstract This paper analyzes the determinants of variation across industries in levels of intra- industry trade (IIT) for a sample of 36 U.S. pro- cessed food and beverage industries in 1987, previous studies of intra-industry trade having focussed on industry characteristics in the manu- facturing sectors. The determinants predicted by IIT theory are measures of product differentiation, economies of scale, and imperfect competition; the results of this analysis indicate that IIT variation across the food and beverage industries is posi- tively related to product differentiation, U.S. total trade, similarity of tariff barriers among trade partners, and economies of scope, but negatively related to industry concentration. Introduction Intra-industry trade (IIT), which is defined as the concurrent importation and exportation of similar goods (Greenaway and Milner, 1986), has become an increasingly important phenomenon in international trade (Verdoorn, 1960; Grubel and Lloyd, 1975). Traditional trade theory, which predicts countries will specialize in the production and export of goods that use their abundant * The paper is based on researchconductedas part of North CentralRegion research project NC-194 entitled, “The Organizationand Performance of World Food Systems: Implicationsfor US Policies.” Journal of Food Distribution Research February 93/page 101