The presence of increasing returns to scale and product differentiation leads to intra-industry trade between highly similar nations, where both import and export varieties of the same product occur. Which trade theory primary explains this pattern?

Which of the following is NOT a commonly proposed explanation for the Leontief Paradox?

In relation to the Heckscher-Ohlin theory, in comparison between countries X and Y, which of the following statements are true? a) Country X is capital-abundant if the relative price of capital in X is lower than in Y. b) Country X is capital-abundant if the relative price of capital in X is higher than in Y. c) Country Y is capital-abundant if the relative price of capital in Y is lower than in X. d) Country Y is capital-abundant if the relative price of capital in Y is higher than in X.