1. Chapter 8: Intra-industry trade
Charles van Marrewijk
International Trade
Chapter 8: Intra-industry trade

2. Intra-EU merchandise trade
8.1 EU merchandise trade flows in 2014
Rest of World
1,058
1,793
2,851
EU imports
EU-28
Intra-EU merchandise trade
2,935
EU exports
1,077
Rest of World
1,858

3. GL 3-digit Grubel-Lloyd index GL 5-digit year
8.3 evolution of intra-industry trade; global weighted average,
0.5
0.4
GL 3-digit
Grubel-Lloyd index
0.3
GL 5-digit
0.2
0.1
year
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006

4. 8.4 deviation between assumed demand and reality
assumption
assumption
reality
reality
assumption
assumption
reality
reality

5. 8.5 production function for a variety of manufactures

6. 8.6 Dixit–Stiglitz optimal pricing
Price MR
demand A p
operating
profits, op MC C q
Quantity

7. 8.7 entry in the Dixit–Stiglitz model
Price
demand A A' p
op ↓ C MC C' MR q’ q
Quantity

8. 8.8 intra-industry trade in the Krugman model
Autarky
Netherlands
7 mln labourers
Production
N = 14,000
Consumption
Trade
Netherlands
7 mln labourers
Production
N = 14,000
Consumption
N = 24,000
Belgium
5 mln labourers
N = 10,000
Belgium exports
7/12th of
production
Dutch exports
5/12th of
production
Autarky
Belgium
5 mln labourers
Production
N = 10,000
Consumption

9. 8.9 sector 87 exports; vehicles other than railway, tramway, 2014

10. Trade extents the market: love-of-variety gains
8.10 the Krugman interpretation .
Final good 2 B
Final good 1
Final good N .
Final good 1 A
Final good N
Final good 2
Exports from B to A
Exports from A to B
Country A
Country B
Consumers country A
Consumers country B
Trade extents the market: love-of-variety gains

11. Trade extents the market: production externality gains
8.11 the Ethier interpretation .
Intermediate 2 B
Intermediate 1
Intermediate N .
Intermediate 1 A
Intermediate N
Intermediate 2
Exports from B to A
Exports from A to B
Country A
Country B
Producers country A
Consumers country A
Producers country B
Consumers country B
Trade extents the market: production externality gains

12. 8.12 top ten export sectors in China; 2-digit hs, billion USD, 2013

13. 8.13a China total trade and sector 85 trade, 1992-2013

14. 8.13b China total trade and sector 85 trade, 1992-2013

15. 8.14 China; net exports in sub-sectors of electronics, per cent of total trade

16. 8.15a China; imports of chips and exports of telephones, % of total trade

17. 8.15b China; imports of chips and exports of telephones, % of total trade