The Chapter 6 glossary is broader than Week 8, so this version keeps only the concepts that support firm-based trade theories.
Firm-Based Trade TheoriesModern explanations of international trade that focus on firms, differentiated products, competitive behavior, scale, innovation, and market structure rather than only national factor endowments.
Country Similarity TheoryThe view that most trade in manufactured goods occurs between countries with similar levels of economic development and similar consumer demand.
Intraindustry TradeTwo-way trade in similar or differentiated products within the same industry, such as automobiles traded between two industrialized countries.
Interindustry TradeTrade in products from different industries, often associated with differences in resources or production structures across countries.
International Product Life CycleA theory describing how production and trade patterns can change as a product moves from introduction to maturity and standardization.
New Product StageThe early stage of the product life cycle in which innovation, close contact with customers, and home-market production are especially important.
Maturing Product StageThe stage in which demand spreads internationally, production begins to move abroad, and cost considerations become more important.
Standardized Product StageThe stage in which a product becomes more commodity-like, price competition intensifies, and production may shift toward lower-cost locations.
New Trade Theory (NTT)The theory that scale economies and first-mover advantages can allow a limited number of firms to dominate global markets, even when countries have similar resource endowments.
Economies of ScaleReductions in average cost that occur as a firm increases the volume of output it produces.
First-Mover AdvantageAn advantage gained by entering a market early, building scale, experience, brand recognition, or network position before rivals.
National Competitive AdvantagePorter’s theory that international success can emerge from the interaction of factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry.
Factor ConditionsThe quality and availability of productive inputs such as skilled labor, infrastructure, knowledge, and capital that support an industry.
Demand ConditionsThe characteristics and sophistication of home-market customers that pressure firms to improve and innovate.
Related and Supporting IndustriesCompetitive supplier and partner industries that strengthen information flows, capabilities, innovation, and productivity.
Firm Strategy, Structure, and RivalryThe domestic conditions shaping how firms are created, organized, managed, and challenged by local competitors.
Industrial ClusterA geographic concentration of interconnected firms, suppliers, institutions, and specialized resources that can reinforce productivity, learning, and innovation.
Agglomeration EconomiesBenefits firms receive from locating near related companies, suppliers, skilled workers, institutions, and knowledge networks.
Competitive AdvantageA distinctive capability, position, or resource that allows a firm to create greater value or compete more effectively than rivals.
