The Linder hypothesis, for example, states that demand is more important than comparative advantage in trade, and that nations with the same demand will be more likely to trade. For example, the United States and Japan are developed countries with considerable demand for cars and a strong automobile industry. The two countries trade various brands of cars, rather than dominating the industry of another country with comparative advantages. Similarly, new trade theory asserts that variation in factor endowments can separately develop comparative advantages.3. Product life cycle The failure of the Heckscher-Ohlin model led to the emergence of new theories to explain events in international trade. The product life cycle theory constructed by Raymond Vernon is one of them. The theory describes the lifespan of a product from its launch, appearance on the market until its final withdrawal from the market. According to Raymond Vernon, products are divided into three types based on their stages in the life cycle and their position in the international trade market. . Three types are: - New