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What are the basis for and gains from inter-industry trade? What are the basis for and gains from intra-industry trade? Briefly explain using trade theories

What are the basis for and gains from inter-industry trade?

What are the basis for and gains from intra-industry trade? Briefly explain using trade theories and concepts

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Question 4 Suppose that the costs to the US of importing an auto part from Mexico or from Asia, subject to different tariff rates, are shown in the table below. Explain the concepts of trade creation and trade diversion using the information in the table. U.S. Tariff 0% 10% 20% From Mexico, before NAFTA $20 $22 $24 From Asia, before NAFTA $19 $20.90 $22.80 From Mexico, after NAFTA $20 $20 $20 From Asia, after NAFTA $19 $20.90 $22.80 From the United States $22 $22 $22 Source: Feenstra, R. C. & A. M. Taylor (2017) International Economics, MacMillan Education

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