Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 3: Problem 9

Distinguish between intra-industry trade and interindustry trade. What are some major determinants of intra-industry trade?

Short Answer

Expert verified
Intra-industry trade involves the exchange of similar products within the same industry, while inter-industry trade involves the exchange of goods across different industries. Some major determinants of intra-industry trade include similarity of preferences, economies of scale, and product differentiation.

Step by step solution

01

Definition of Intra-industry Trade

Intra-industry trade refers to the exchange of similar products belonging to the same industry. For example, a country could export cars to a country and also import cars from that same country.
02

Definition of Inter-industry Trade

Inter-industry trade involves the exchange of goods belonging to different industries. For an example, a country exports garments and imports electronic goods.
03

Major determinants of Intra-industry Trade

There are several factors that affect intra-industry trade. These include the similarity of preferences, economies of scale in production, and product differentiation. Specifically, countries with similar preferences and income levels tend to engage more in intra-industry trade. Market size also matters because larger markets promote a higher level of intra-industry trade as they allow firms to exploit economies of scale.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Explain how the international movement of products and of factor inputs promotes an equalization of the factor prices among nations.

What are the effects of transportation costs on international trade patterns?

The factor-endowment theory demonstrates how trade affects the distribution of income within trading partners. Explain.

How can governmental regulatory policies affect an industry's international competitiveness?

International trade in services is determined by what factors?
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free