Consider the sources of the gains from international trade.Economies of scale and product differentiation can provide an explanation for

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Intra-industry trade refers to the exchange of goods within the same industry or product category between countries. This type of trade is driven by economies of scale and product differentiation, where different countries specialize in the production of different varieties of the same product. This results in gains from trade as countries can consume a wider range of products than they could produce domestically at a lower cost.

Consider the Sources of the Gains from International Trade