lec13-eco101-11

lec13-eco101-11 - InternationalTrade Lecture13 c ⃝...

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Unformatted text preview: InternationalTrade Lecture13 c ⃝ Marc-AndreasMuendler UniversityofCalifornia,SanDiego November8,2011 13.TradeunderExternalEconomiesofScale Econ101, c ⃝ M.Muendler Trade,ExternalEconomiesandGrowth • Theanalysisto-dateappliestoalong-term,staticperspectiveinthe absenceofexternalities • Externaleconomiesofscaleareaformofexternalities • Thedirectimpactoftradeongrowthinproductionpossibilitiesadds adynamiccomponent • Maintainthelong-termperspective 13.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 13.TradeunderExternalEconomiesofScale Econ101, c ⃝ M.Muendler ExternalEconomiesofScale • Externaleconomiesofscale :Economiesofscalethatoccuratthe leveloftheindustryinsteadofthelevelofthefirm Thecostperunitofoutputfallswiththesizeoftheindustrybutnot directlywiththesizeofanyindividualfirm • Industriestypicallyconsistofseveralormany(non-dominant)firms • Externaleconomiesareanadditionalcausefortrade • However,externaleconomiesmayalsobearationalefortemporary traderestrictions 13.TradeunderExternalEconomiesofScale Econ101, c ⃝ M.Muendler ExternalEconomiesofScale • Aclusteroffirmsmaybemoreefficientthananisolatedfirm – Specializedsuppliers Multiplebuyersmitigatehold-upproblem,permitlearningbydoing...
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This note was uploaded on 01/30/2012 for the course ECON 101 taught by Professor Jacobson during the Fall '03 term at UCSD.

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lec13-eco101-11 - InternationalTrade Lecture13 c ⃝...

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