Question

Intra-industry trade in differentiated products can be explained by?

Answer 1

Intra-industry trade in differentiated products can be explained by specialized learning, economies of scale, and splitting up the value chain.

Step-by-step explanation:

Intra-industry trade in differentiated products can be explained by several factors:

1. Specialized learning in specific tasks: Intra-industry trade allows nations to take advantage of extreme specialization and learning in certain types of products. For example, nations can specialize in producing gas-efficient cars, luxury cars, or sport-utility vehicles, depending on their expertise and resources.
2. Economies of scale: Intra-industry trade enables large companies to compete across international borders, benefiting from economies of scale. This leads to enhanced competition and variety for customers.
3. Splitting up the value chain: Intra-industry trade involves different stages of producing a good taking place in different countries. This allows for efficient allocation of resources and cost savings.

Overall, intra-industry trade provides advantages such as specialization, economies of scale, and increased competition, benefiting both nations and consumers.