lec12-eco101-10

lec12-eco101-10 - InternationalTrade Lecture12 c...

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Unformatted text preview: InternationalTrade Lecture12 c Marc-AndreasMuendler UniversityofCalifornia,SanDiego November4,2010 12.TradeunderExternalEconomiesofScale Econ101, c M.Muendler Trade,ExternalEconomiesandGrowth Theanalysisto-dateappliestoalong-term,staticperspectiveinthe absenceofexternalities Externaleconomiesofscaleareaformofexternalities Thedirectimpactoftradeongrowthinproductionpossibilitiesadds adynamiccomponent Maintainthelong-termperspective 12.TradeunderExternalEconomiesofScale Econ101, c M.Muendler StaticandDynamicExternalEconomies Basicingredients(assumptions) Numberoffactorsofproduction:any,givingrisetosomePPF Mobilityoffactorsofproduction:inthebackground Numberofindustries(goods):1,2(or N ) Numberofcountries:2(Home:advanced,Foreign * :latecomer) Freeentry ,transportcosts: Keyforces :Externaleconomiesofscale 12.TradeunderExternalEconomiesofScale Econ101, c M.Muendler ExternalEconomiesofScale Externaleconomiesofscale :Economiesofscalethatoccuratthe leveloftheindustryinsteadofthelevelofthefirm Thecostperunitofoutputfallswiththesizeoftheindustrybutnot directlywiththesizeofanyindividualfirm Industriestypicallyconsistofseveralormany(non-dominant)firms Externaleconomiesareanadditionalcausefortrade However,externaleconomiesmayalsobearationalefortemporary traderestrictions 12.TradeunderExternalEconomiesofScale Econ101, c M.Muendler ExternalEconomiesofScale Aclusteroffirmsmaybemoreefficientthananisolatedfirm Specializedsuppliers Multiplebuyersmitigatehold-upproblem,permitlearningbydoing...
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This note was uploaded on 05/01/2011 for the course ECON 101 taught by Professor Jacobson during the Spring '03 term at UCSD.

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lec12-eco101-10 - InternationalTrade Lecture12 c...

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