If trading costs over the physical distance separating the agglomerations decline sufficiently, international trade may take place even though the goods are similar, which can help to explain why intra-industry trade may or may not occur, irrespective of traditional economies of scale that are internal to firms.

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This statement is true. When trading costs decrease, firms may find it more feasible to trade even if the goods are similar, which can lead to intra-industry trade even without traditional economies of scale.

If Trading Costs Over the Physical Distance Separating the Agglomerations