The ____________ model best explains intra-industry trade.
A) Ricardian
B) Heckscher-Ohlin
C) monopolistic competition
D) specific-factors

Question

Quizplus · Accepted Answer

Intra-industry trade occurs when countries specialize in the production of differentiated products that are similar to each other. This is best explained by the monopolistic competition model, which suggests that firms in a given industry produce slightly differentiated products and compete based on product differentiation, rather than price. This leads to trade between countries in the same industry, with each country exporting the products that they produce most efficiently.

The ____________ Model Best Explains Intra-Industry Trade