One of the main things that distinguishes Neanderthal digs from Cro-Magnon ones is that Neanderthals only used materials that could be found locally, while modern man could have say, obsidian that was mined maybe hundreds of miles away.
Modern man could communicate and understand new things and ended up filling all the niches much better than the Neanderthals who were always protecting themselves from foreigners.
To expand on my remarks, in order to suggest that early humans 40,000 years ago engaged in "free trade" you would have to establish that they regarded the products supplied by foreign tribes the same as identical products of their own making, and facilitated direct competition between the two. In the first place, there is no way I can think of to interpret such a thing; and second, there is very little reason to believe that they would trade for anything they could procure on their own.
We know more or less how basic subsistence cultures operate from experience with those that have entered the historical record, and "free trade" as commonly understood is hardly an accurate characterization. There are all kinds of direct and indirect barriers to trade with neighboring groups (even more so with distant, alien peoples). What reason is there to think that rudimentary cultures 40,000 years ago behaved any differently?
Bascially what happend was the neanderthals wiped themselves out.
Consider that Neandertal isolationism from yet another angle, rather than just the economic-trade issue..
It may have effected them socially as well..
Neandertal may have practiced inter-marriage within the tribal structure and only rarely introduced new genetic material from the outside..
If this were "common practice", recessive genetic traits may have been passed from one tribal group to another, weakening the species..
For Cro-Magnon man, the "gatherings" may have meant more than opportunity for trade of obsidian and artwork, but also for finding mates outside of the tribe, mates that were not likely to be familialy related..
Greater genetic diversity and transfer would contribute to a flourishing species..