Microeconomics › Section S · International trade › Topic S.3
Intra-industry trade between similar economies
Much of world trade is not rich countries swapping machines for poor countries' crops. It is similar countries selling each other cars, medicines and machinery. Explaining that pattern needs two extra ideas: specialised learning and economies of scale.
In this topic
- A pattern Ricardo does not predict
- What intra-industry trade is
- Measuring it
- Worked example: three industries
- Reason one: specialised learning
- Reason two: economies of scale
- Worked example: two car models
- Competition and variety
- Comparative advantage that changes
- Common mistakes to avoid
- Key takeaways
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