TradeLecture14

TradeLecture14 - Chapter 6 Economies of Scale, Imperfect...

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Chapter 6 Economies of Scale, Imperfect Competition and ternational Trade International Trade lides based on Krugman and Obstfeld (2003) 6 th , and Slides based on Krugman and Obstfeld (2003) 6 ed, and slides prepared for Pearson Education by Iordanis Petsas and Elias Dinopoulos.
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Introduction In Chapter 2 we noted that countries engage in t t i lt d f t b i international trade for two basic reasons: Because they differ either in their resources or in technology. In order to achieve scale economies or increasing returns in production. Chapter 6 e e plore t o models of In Chapter 6 we explore two models of international trade in which economies of scale and imperfect competition play a crucial role: Monopolistic competition model Dumping model © Ben Zissimos, Vanderbilt University
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Economies of Scale and International Trade: n Overview An Overview In all the models we have seen so far, trade was based on comparative advantage. These all used the assumptions of constant returns to scale and perfect competition: Increasing all inputs increases output in the same roportion proportion. In practice, many industries are characterized by onomies of scale (also referred to as increasing economies of scale (also referred to as increasing returns) The larger the scale, the more efficient is production.
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TradeLecture14 - Chapter 6 Economies of Scale, Imperfect...

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