Linder's theory of over-lapping demand:

Staffan  Linder (1961) proposed an  alternative  theory of trade that was consistent with Leontief's paradox. The Linder hypothesis presents a demand based theory  of  trade in contrast to  the supply based  theories  involving international differences in technologies or factor endowments. According to the theory developed by Linder, trade in manufactured goods occurs between countries with  similar domestic  demand  conditions -  an  alternative explanation to trade. Linder hypothesised that nations with similar demands would develop similar industries. These nations would  then trade with each other in similar but differentiated  goods.

Hypothesising that similar tastes or preferences derive primarily from similar income levels, Linder predicted that trade in manufactured goods would occur between countries with overlapping demands  as  reflected in overlapping ranges of per capita income. It is evident that much trade in manufactures does occur among industrial nations, rather than between industrial and  developing nations as the traditional factor endowment theories would predict. However, global trade trends cannot be fully explained by this theory as there are strong trade linkages between the developed and developing worlds as well.