The Differentiation of Products and Opportunity for Intra-Industry Exchange

The financial crisis of the late 2000s gave rise to protectionist hints which called into question the consensus on the liberalization of world trade since the creation of the World Trade Organization (WTO) in 1995. This trend towards protectionism has taken on new magnitude with the arrival of Donald Trump as President of the United States of America. In fact, since the beginning of 2018, the American administration has carried out its threats by imposing customs duties on imports of the various products from China and the European Union. In retaliation, the countries concerned responded with restrictions on American exports to their territory. Also the rationality of the market economy, there is more and more opposed the power of emotions and impulses embodied by the populists at the head of which D. Trump, the American President. Globalization is therefore required to adapt its rules to survive. The purpose of this paper is to show that for a good adaptation of its rules, it is necessary to activate one of the most powerful levers of gains in international trade, the differentiation of products. This is a response to the exploitation of the diversification and heterogeneity of demand in terms of tastes and incomes. Because, by allowing the firm to differentiate its products to distinguish them from those of competitors, differentiation offers the opportunity to soften competition, increase profits and improve product quality.