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6: Economies of Scale and International Trade
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- 6.1: Chapter Overview
- 6.2: Economies of Scale and Returns to Scale
- 6.3: Gains from Trade with Economies of Scale- A Simple Explanation
- The main reason the presence of economies of scale can generate trade gains is because the reallocation of resources can raise world productive efficiency. To see how, we present a simple example using a model similar to the Ricardian model.
- 6.4: Monopolistic Competition
- Monopolistic competition refers to a market structure that is a cross between the two extremes of perfect competition and monopoly. The model allows for the presence of increasing returns to scale in production and for differentiated (rather than homogeneous or identical) products. The model is especially useful in explaining the motivation for intraindustry trade.
- 6.5: Model Assumptions: Monopolistic Competition
- 6.6: The Effects of Trade in a Monopolistically Competitive Industry
- 6.7: The Costs and Benefits of Free Trade Under Monopolistic Competition