nations trading whole finished products like automobiles or refrigerators. Instead, it involves shipping more

specialized goods like, say, automobile dashboards or the shelving that fits inside refrigerators. Intra-industry

trade between similar countries produces economic gains because it allows workers and firms to learn and

innovate on particular products—and often to focus on very particular parts of the value chain.

LINK IT UP

Visit this website (http://openstax.org/l/iphoneassembly) for some interesting information about the assembly

of the iPhone.

Economies of Scale, Competition, Variety

A second broad reason that intra-industry trade between similar nations produces economic gains involves

economies of scale. The concept of economies of scale, as we introduced in Production, Costs and Industry

Structure, means that as the scale of output goes up, average costs of production decline—at least up to a point.
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