International Advances in Economic Research

, Volume 7, Issue 4, pp 393–408 | Cite as

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.


Economic Growth Production Process Vital Role International Economic Specific Production 
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Copyright information

© International Atlantic Economic Society 2001

Authors and Affiliations

  • Teit Lüthje
    • 1
  1. 1.University of Southern DenmarkDenmark

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