15 Economies of Scale, Part 1 - Economies of Scale Part 1 Introduction Economies of Scale Introduction The Monopoly Firm Models of comparative advantage

15 Economies of Scale, Part 1 - Economies of Scale Part 1...

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1 1 Economies of Scale, Part 1 Introduction Economies of Scale The Monopoly Firm The Economics of Dumping Reciprocal Dumping 2 Introduction Models of comparative advantage explain trade based on differences in productivity or resources between countries. – They are based on the assumptions of: Perfect competition , and Constant returns to scale . 3 Introduction Two features of international trade that cannot be explained by these models of comparative advantage are: 1. Trade between countries that have similar technologies and resource endowments . 2. The existence of intra-industry trade . 4 Introduction It is possible to explain both of these in a model that includes: Economies of scale, and Differentiated products .