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Notes Feb10 - increasing returns to scale-Consumers benefit...

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EC340 Sec. 3 Professor Matusz 2/10/11 Monopolistic Competition in International Trade - Trade could occur even when all countries identical - Location of firms is arbitrary - Each produces a different variety - Some firms that exist in Autarky will be pushed out when trade is permitted - Firms that remain will be bigger and have lower average cost because of
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Unformatted text preview: increasing returns to scale.-Consumers benefit from trade because of more variety and a lower price Oligopoly – a small number of firms Duopoly – two firms Assume 2 countries (U.S. and Europe) and 2 firms (Boeing and Airbus)...
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