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Chapter 33: Q.24 (page 804)

Do consumers benefit from intra-industry trade

Short Answer

Expert verified

Yes

Step by step solution

01

Step 1. Introduction 

Intra-industry trade refers to the trade of similar types of products between different countries. A significant portion of international trade is composed of trade between advanced high-income countries. who trade similar products.

02

Step 2. Explanation 

Consumers are benefited from intra-industry trade as they get a greater variety of products. Intra-industry trade can help in product differentiation in the same industry. International competition is also likely to drive prices down.

For instance, if a country produces cars, without trade the variety of cars in the market would be limited. There would be very small degree of competition in the domestic market. But intra-industry trade would competition and variety in the market.

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