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Intraindustry trade in intermediate goods


  • Teit Lüthje


Since intermediate goods play such a vital role in foreign trade, this paper develops a model that explains the benefits from intraindustry trade in differentiated intermediate goods. In comparison with a situation of autarchy, this type of trade causes an increase in the number of intermediate good varieties. In this way, the producers of final goods will benefit from intermediate good varieties, which are closer to the ideal for a specific production process. At the same time, the producers of intermediate goods will, under conditions of international division of labor, benefit from economies of scale. Copyright International Atlantic Economic Society 2001

Suggested Citation

  • Teit Lüthje, 2001. "Intraindustry trade in intermediate goods," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 7(4), pages 393-408, November.
  • Handle: RePEc:kap:iaecre:v:7:y:2001:i:4:p:393-408:10.1007/bf02295769
    DOI: 10.1007/BF02295769

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    References listed on IDEAS

    1. Brander, James & Krugman, Paul, 1983. "A 'reciprocal dumping' model of international trade," Journal of International Economics, Elsevier, vol. 15(3-4), pages 313-321, November.
    2. Ethier, Wilfred, 1979. "Internationally decreasing costs and world trade," Journal of International Economics, Elsevier, vol. 9(1), pages 1-24, February.
    3. anonymous, 1981. "International economic situation and outlook," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 44, january/f.
    4. anonymous, 1981. "The International Monetary Fund," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 44, june.
    5. Brander, James A., 1981. "Intra-industry trade in identical commodities," Journal of International Economics, Elsevier, vol. 11(1), pages 1-14, February.
    6. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132-132.
    7. anonymous, 1981. "International economic situation and developments," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 44, August.
    8. David Greenaway & Johan Torstensson, 1997. "Back to the future: Taking stock on intra-industry trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 133(2), pages 249-269, June.
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