Increasing returns,monopolistic competition,and international trade |
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Authors: | Paul R. Krugman |
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Affiliation: | Yale University, New Haven, CT 06520, USA |
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Abstract: | ![]() This paper develops a simple, general equilibrium model of noncomparative advantage trade. Trade is driven by economies of scale, which are internal to firms. Because of the scale economies, markets are imperfectly competitive. Nonetheless, one can show that trade, and gains from trade, will occur, even between countries with identical tastes, technology, and factor endowments. |
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