Economists conventionally assume that intraindustry trade (IIT) entails relatively smoothfactor-market adjustment to trade liberalisation. However, the appropriate definition of IIT inthe adjustment context continues to be a matter of debate. A consensus is emerging that, in thecontext of adjustment, one should use measures that are based on marginal IIT, and a range ofmeasu...

This paper sets up a two country monopolistic competition model with intra-industry trade to study the effects of an exogenous differential in wage and social policies on the location of industry. Two model scenarios are considered. In the traditional one with physical capital, such a differential induces a relocation effect which increases with the level of trade integration. The ‘new economic...

Internationalisation of production has important effects on world trade The growing “internationalisation” of production systems, which increasingly involve vertical trading chains spanning a number of countries, each specialising in a particular stage of production, is an important feature behind the changing nature and increasing scale of world trade. Although there is considerable anecdotal ...