Intra-industry trade provides a way to combine the lower average production costs that come from economies of scale and still have competition and variety in the market.
Economies of scale refers to a situation where the average costs per unit of output decrease with the increase in the scale of the output being produced by a firm.
What is intra-industry trade model?
Intra-industry trade refers to the exchange of similar products belonging to the same industry. The term is usually applied to international trade, where the same types of goods or services are both imported and exported.
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