class-28 - TODAY class 28 Wed Nov 18 (sect. 101,102) Causes...

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1 TODAY – class 28 – Wed Nov 18 (sect. 101,102) • Causes of International Trade (continued) – Increasing returns: • Brander (8, 166-169); Brander (9, 185–190) – Differences in market structure Differences in market structure – Improvements in communication and lower trade costs Next 3 classes – debates 4, 5 and 6. Next lecture – Friday, Nov 27 – Vertical fragmentation of production – Types of trade policy- Brander (8, 169-172) Comm394- Barbara Spencer – Start normative reasons for trade policy -Brander (8, 172- 176) Section 103 (11.00 am has debate 4 today) Canadian Trade patterns • Autos and parts pattern due to economies of scale (IRS) – pattern due to economies of scale (IRS). • Net exporter of forest, energy and other natural resource products - due to comparative advantage. • Net importer of consumer goods, machinery and equipmen Comm394- Barbara Spencer equipment – Importance of innovation; IRS and oligopolistic competition.
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2 Canadian exports to US: 2008 – energy has risen and now exceeds autos and parts BC Stats, “20 years of free trade with US”-on class website
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3 Causes of international Trade: (ii) Increasing returns to scale (IRS) • IRS is reflected in a declining average cost curve – e.g. goods that require high capital investment for plant and equipment or R&D. • as output rises, the fixed costs of capital
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class-28 - TODAY class 28 Wed Nov 18 (sect. 101,102) Causes...

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