国际贸易课后习题答案feenstra trade sm_chap06.pdfVIP

6 Increasing Returns to Scale and Monopolistic Competition 1. Explain how increasing returns to scale in production can be a basis for trade. Answer: With increasing returns to scale, countries benefit from trade due to the po- tential to reduce their average costs by expanding their outputs through selling in a larger market. 2. Why is trade within a country greater than trade between countries? Answer: Border effects prevent trade be