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Handbook of Trade Policy for Development$
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Arvid Lukauskas, Robert M. Stern, and Gianni Zanini

Print publication date: 2013

Print ISBN-13: 9780199680405

Published to Oxford Scholarship Online: January 2014

DOI: 10.1093/acprof:oso/9780199680405.001.0001

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Trade and the Gains from Trade in the Presence of Decreasing Costs and Imperfect Competition

Trade and the Gains from Trade in the Presence of Decreasing Costs and Imperfect Competition

Chapter:
(p.114) Chapter 5 Trade and the Gains from Trade in the Presence of Decreasing Costs and Imperfect Competition
Source:
Handbook of Trade Policy for Development
Author(s):

Mary E. Lovely

Devashish Mitra

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199680405.003.0005

Mary Lovely and Devashish Mitra explore an important class of alternative models of trade based on economies of scale. They present four different types of scale economies, derived from distinctions drawn on two dimensions. The first centers on whether scale economies are internal to an individual firm or external to it, the second on whether geographic concentration of production is necessary for costs to fall as the scale of activity increases (that is, whether scale economies are national or international in scope). The authors find that the conclusions that can be drawn regarding the effect of trade and the role of policy are sensitive to the form of scale economy and the structure of the market.

Keywords:   Trade models, scale economies, firms, geography, market structure, trade

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