Final answer:
Michael Porter suggests that a global industry can achieve competitive advantage through worldwide integration and leveraging of operations. Intra-industry trade and splitting up the value chain are crucial for countries to specialize and gain from economies of scale, enhancing competition and variety for consumers.
Step-by-step explanation:
According to Michael Porter, a global industry is one in which competitive advantage can be achieved by integrating and leveraging operations on a worldwide scale. In a global industry, intra-industry trade allows for specialization and extreme learning within certain product types, which can lead to absolute advantage. For example, various countries may specialize in different kinds of cars such as luxury cars or gas-efficient cars. This specialization and the subsequent gain from trade enable countries to consume more than they can produce on their own.
Moreover, by splitting up the value chain, different stages of producing a good are located in different geographic areas. This allows industries to take full advantage of economies of scale, resulting in a scenario where large companies compete across international borders, fostering competition and providing a variety of choices to consumers. Such trade relations not only exist internationally but also between states, where similar benefits are observed.