CH06Economies of Scale,Imperfect Competition, and International Trade(发展经济学-厦门大学,陈涛).pptVIP

Chapter 6 Economies of Scale,Imperfect Competition, and International Trade Chapter Organization Introduction Economies of Scale and International Trade: An Overview Economies of Scale and Market Structure The Theory of Imperfect Competition Monopolistic Competition and Trade Dumping The Theory of External Economies External Economies and International Trade Summary Introduction Countries engage in international trade for two basic reasons: Countries trade because they differ either in their resources or in technology. Countries trade in order to achieve scale economies or increasing returns in production. Two models of international trade in which economies of scale and imperfect competition play a crucial role: Monopolistic competition model Dumping model Economies of Scale and International Trade: An Overview Models of trade based on comparative advantage (e.g. Ricardian model) used the assumptions of constant returns to scale and perfect competition: Increasing the amount of all inputs used in the production of any commodity will increase output of that commodity in the same proportion. In practice, many industries are characterized by economies of scale (also referred to as increasing returns). Production is most efficient, the larger the scale at which it takes place. Economies of Scale and International Trade: An Overview Under increasing returns to scale: Output grows proportionately more than the increase in all inputs. Average costs (costs per unit) decline with the size of the market. Economies of Scale and International Trade: An Overview Economies of Scale and Market Structure Economies of scale can be either: External The cost per unit depends on the size of the industry but not necessarily on the size of any one firm. An industry will typically consist of many small firms and be perfectly competitive. Internal The cost per unit depends on the size of an individual firm but not necessarily on that of the industry. The market struc