Economists have long recognized that richer countries trade more among themselves
than with poorer 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 so-called Linder
hypothesis. This paper examines an extension of the Linder hypothesis by also considering
the extent of horizontal product differentiation as another determinant of the closeness
of supply and demand. The empirical analysis employs information on international
trademark registrations to test whether richer countries import more from countries
whose exports are of higher quality and exhibit a greater degree of product differentiation.
The results lend support to the hypothesis in most consumer goods sectors but not
in intermediate goods sectors.