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International Cooperation and Intra-Industrial Transactions

By Bernard Michael Gilroy and Udo Broll

Abstract

The paper examines theoretically the empirical observation or increasing levels of intra-industrial trade flows. The relationship between intra-industrial trade and consumer preferences in addition to product differentiation advanced by internationally active firms are discussed within the framework of a simple model of international trade in differentiated goods. In an international free trade scenario, ranking high in product differentiation and monopolistic market structures, the intensity of international trade activities steadily rises as the structure of consumer preferences exhibits demand pattern similarity: export and import levels rise simultaneously. Intra-industrial commodities exchanges as well as investment cross-hauling of multinational enterprises prove to be important vehicles international cooperation among nation.intra-industrial trade; consumer preferences; product differentiation; international trade; multinational enterprises

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