A variant on this is driven not by production technology, but by product differentiation
in the market. Motor cars are a good example, but petroleum products, electronic equipment
and a whole range of consumer goods also qualify. In these cases the cause of
trade is differences in tastes between countries. For example, motor car manufacturers
face economies of scale, so low-volume production is expensive. If most Americans like
to drive very big motor cars, while most Europeans prefer to drive small motor cars,
then the minority in Europe who wish to purchase large motor cars can benefit from
importing American cars and vice versa, especially if transport costs are low. This has
had a tremendous impact on trade. In most countries consumers can now choose from
twenty or thirty different brands of motor car, each sold at a highly competitive price.
The production economics of car manufacture is such that if the market were fully
supplied by UK manufacturers, there could only be a small number of different designs,
and costs would almost certainly be higher. Similarly, if oil refineries are technically
restricted to producing a mix of petroleum products which does not exactly match local
demand, they will seek to export the products not needed locally.