Short 5 - E 101 Short Note 5 Economies of Scale Trade...

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1 E 101: Short Note – 5. Economies of Scale & Trade (* Lectures are mainly based on our textbook, Krugman’s International Economics: Theory and Policy. Thorough reading of the text in addition to active participation in classes is strongly recommended. This note is just a short list of topics we discuss in class for your reference.) II. New Trade Theory: Imperfect Competition & Trade 1. Imperfect competition and intra-industry trade O Source of Imperfect Competition: Economies of Scale External economies of scale occur when cost per unit of output depends on the size of the industry . Internal economies of scale occur when the cost per unit of output depends on the size of a firm .
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