1.   In between these extremes the intraindustry share is increasing in similarity of relative factor endowments, and it depends on country size.

2.   In particular, we will relate the share of intraindustry trade to cross-country differences in relative factor endowments and relative country size.

3.   Obviously in such a case predicting trade from factor endowments will be much more complex than in our simpler cases.

4.   Since all countries will face the same implicit prices, differences in relative production can be predicted from factor endowments.

5.   The alternative case where free entry restores standard comparative advantage is when factor endowments are sufficiently similar to permit factor price equalization.

6.   The curves in the figure describe combinations of factor endowments at which the share of intraindustry trade is constant.

7.   The reason is that the distribution of imperfectly competitive firms across countries can now shift to accommodate differences in factor endowments.

8.   This will presumably happen if countries are sufficiently similar in relative factor endowments and if economies of scale are sufficiently important.