On this question, there are two views: (i) the classical view and (ii) OHLIN's view.

Classical View :

Classical economists believed that there was a fundamental difference between home trade and foreign trade. They pointed out that, labour and capital move freely within a country but not between different countries.

Thus, international immobility of factors was the basic criterion accepted by the classical economists for the emergence of international trade. MOREOVER, different national policies, different POLITICAL units, different monetary systems, and artificial barriers like tariffs and exchange controls involved in international trade distinguish it from domestic trade.

Ohlin's View :

Bertil Ohlin, the Swedish economist, however, challenged the traditionally accepted notion on international trade by advocating that there is no need for a separate theory of international trade. In his view "international trade is but a special case of inter-local or inter-regional trade."

He opines, that, the Marshallian theory of value can be easily extended to the phenomenon of international trade by developing the "space" thesis instead of the "time" hypothesis in the Marshallian Price Theory. "Space element is vital for the international trade and should be given FULL consideration in the theory of pricing, through its extension from one to a number of more or less closely related markets. Such an extension can be based upon one market analysis."

On this question, there are two views: (i) the classical view and (ii) Ohlin's view.

Classical View :

Classical economists believed that there was a fundamental difference between home trade and foreign trade. They pointed out that, labour and capital move freely within a country but not between different countries.

Thus, international immobility of factors was the basic criterion accepted by the classical economists for the emergence of international trade. Moreover, different national policies, different political units, different monetary systems, and artificial barriers like tariffs and exchange controls involved in international trade distinguish it from domestic trade.

Ohlin's View :

Bertil Ohlin, the Swedish economist, however, challenged the traditionally accepted notion on international trade by advocating that there is no need for a separate theory of international trade. In his view "international trade is but a special case of inter-local or inter-regional trade."

He opines, that, the Marshallian theory of value can be easily extended to the phenomenon of international trade by developing the "space" thesis instead of the "time" hypothesis in the Marshallian Price Theory. "Space element is vital for the international trade and should be given full consideration in the theory of pricing, through its extension from one to a number of more or less closely related markets. Such an extension can be based upon one market analysis."