Scale Economies
Scale Economies, Imperfect Competition, and Trade
- constant returns to scale
- , input use and total cost rise in the same proportion as output increases.
Chapter 6
Scale Economies, Imperfect Competition, and Trade
Scale Economies, Imperfect Competition, and Trade Standard trade theory presented in Chapters 3-5 is based on perfect competition, with constant returns to scale at the level of the individual firm and constant or increasing cost of expanding production at the level of the industry. Comparative advantage predicts that countries will trade with other countries that are different (the source of the comparative cost differences) and that each country will export some products and import other, quite different products.
Slide19
知识点5
案例4
习题60
Knowledge Points
知识点
Monopolistic Competition and Trade
The remainder of the chapter presents the three additional trade theories. The first is based on monopolistic competition. While there may be a number of explanations of intra-industry trade, product differentiation seems to be the major one. The market structure of monopolistic competition is useful for analyzing the role of product differentiation.
- If scale economies are modest or moderate, there is room in the industry for a large number of firms.
- For products that are differentiated, a mild form of imperfect competition called
- monopolistic competition
Intra-Industry Trade
The next section of the chapter defines intra-industry trade (IIT), in which a country both exports and imports the same product or very similar product varieties. It explains how IIT is measured for an individual product, with examples shown in Figure 6.2. The importance of IIT in a country’s overall trade is the weighted average of the IIT shares for each of the individual products.
- Net trade
- for an industry is the difference between exports and imports of the industry’s product(s).
- Inter-industry trade
Economies of Scale
Scale Economies, Imperfect Competition, and Trade
- constant returns to scale
- , input use and total cost rise in the same proportion as output increases.
Oligopoly and Trade
The second theory is global oligopoly. In some industries, a few large firms account for most global sales, perhaps because internal scale economies are large. Although we do not have a single dominant full theory of oligopoly, we can make several observations about oligopoly and trade. First, scale economies tend to concentrate production in a few production sites.
- If scale economies are modest or moderate, there is room in the industry for a large number of firms.
- For products that are differentiated, a mild form of imperfect competition called
- monopolistic competition
Cases
案例与情境
b.With respect to short-run pressures on economic well-being, owners of ...
b.With respect to short-run pressures on economic well-being, owners of factors employed in industries that could expand exports are likely to support the policy shift, because the demand for these factors increases as firms attempt to expand production. Owners of factors employed in industries that will receive increased competition from imports are likely to oppose the policy shift (unless they feel that other benefits from such changes as greater product variety more than offset their direct income losses).
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b.With respect to short-run pressures on economic well-being, owners of factors employed in industries that could expand exports are likely to support the policy shift, because the demand for these factors increases as firms attempt to expand production. Owners of factors employed in industries that will receive increased competition from imports are likely to oppose the policy shift (unless they feel that other benefits from such changes as greater product variety more than offset their direct income losses). With respect to long-run pressures on economic well-being, the Stolper-Samuelson theorem is relevant. Owners of India's abundant factors of production are likely to support the policy shift, because they will gain real income. Owners of India's scarce factors are likely to oppose the shift, because they will lose real income (again, unless other benefits more than offset the direct
b.From the perspective of the well-being of the United States or ...
b.From the perspective of the well-being of the United States or Europe, a high-price equilibrium could be desirable because it involves setting high prices on export sales to other countries. This equilibrium also results in sales to domestic buyers at high prices, so there is some loss of pricing efficiency domestically.
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b.From the perspective of the well-being of the United States or Europe, a high-price equilibrium could be desirable because it involves setting high prices on export sales to other countries. This equilibrium also results in sales to domestic buyers at high prices, so there is some loss of pricing efficiency domestically. But the benefits to the country from charging high prices on exports and improving its terms of trade can easily be larger, so that overall the high-price equilibrium can be desirable.
Our third theory is based on scale economies that are external ...
Our third theory is based on scale economies that are external to the individual firm but arise from advantages of having a high level of production in a geographic area. With external scale economies (also called agglomeration economies), an expansion of demand (such as that caused by increased exports) can result in a lower unit cost for all producers in the area and a lower product price.
查看原始摘录
Our third theory is based on scale economies that are external to the individual firm but arise from advantages of having a high level of production in a geographic area. With external scale economies (also called agglomeration economies), an expansion of demand (such as that caused by increased exports) can result in a lower unit cost for all producers in the area and a lower product price. With free trade production tends to be concentrated in one or a few locations. In the shift from no trade to free trade, production in some locations would increase so that their unit costs and prices fall, while production in other locations would decrease or cease. It is not easy to predict which locations become dominant—luck, a large domestic market, or government policy may be important. The importing countries gain from trade, even if local production ceases, because consumers benefit from the
Standard trade theory presented in Chapters 3-5 is based on perfect ...
Standard trade theory presented in Chapters 3-5 is based on perfect competition, with constant returns to scale at the level of the individual firm and constant or increasing cost of expanding production at the level of the industry. Comparative advantage predicts that countries will trade with other countries that are different (the source of the comparative cost differences) and that each country will export some products and import other, quite different products.
查看原始摘录
Standard trade theory presented in Chapters 3-5 is based on perfect competition, with constant returns to scale at the level of the individual firm and constant or increasing cost of expanding production at the level of the industry. Comparative advantage predicts that countries will trade with other countries that are different (the source of the comparative cost differences) and that each country will export some products and import other, quite different products. While much international trade conforms to these patterns, a substantial amount does not. Most obviously, industrialized countries trade a lot with each other, and in much of their trade each is exporting and importing similar products.
Exercises
习题与答案
题目 1Scale Economies
The Heckscher-Ohlin theory predicts that trade between similar industrialized countries should
- A) be much greater than trade between developed and developing countries.
- B) be rather limited in volume.
- C) consist mainly of highly sophisticated manufactured goods.
- D) consists mainly of manufactured products intensive in low- and medium-skill labor.
正确答案：B | be rather limited in volume.
难度：1 Easy Bloom's：Remember
题目 2Scale Economies
Scale economies are said to be present when
- A) an increase in output leads to an increase in average cost.
- B) an increase in output has no impact on average cost.
- C) an increase in output leads to a decrease in average cost.
- D) there is a single firm in an industry.
正确答案：C | an increase in output leads to a decrease in average cost.
难度：1 Easy Bloom's：Remember
题目 3Scale Economies
Internal scale economies occur when
- A) expansion of output by a firm leads to greater specialization of labor.
- B) expansion in an industry drives down input prices.
- C) industry growth leads to a greater diffusion of knowledge among firms.
- D) a firm pays higher input prices to expand production.
正确答案：A | expansion of output by a firm leads to greater specialization of labor.
难度：1 Easy Bloom's：Remember
题目 4Monopolistic Competition and Trade
________ is a market structure in which a large number of firms compete vigorously with each other in producing and selling different varieties of a basic product.
- A) Perfect competition
- B) Monopoly
- C) Oligopoly
- D) Monopolistic competition
正确答案：D | Monopolistic competition
难度：1 Easy Bloom's：Remember
题目 5Scale Economies
When Firm X doubled its output, it was found that its cost per unit declined by 10 percent. It can be concluded that
- A) the firm was facing external scale diseconomies.
- B) the firm was enjoying internal scale economies.
- C) the firm was operating on the inelastic portion of the demand curve.
- D) the marginal cost of production at the initial output level was constant.
正确答案：B | the firm was enjoying internal scale economies.
难度：1 Easy Bloom's：Remember
题目 6Scale Economies
Which of the following can best explain the clustering of some industries, such as banking and finance in New York City and high-technology computer production in Silicon Valley?
- A) External scale economies
- B) Perfect competition
- C) Intra-industry trade
- D) Comparative advantage
正确答案：A | External scale economies
难度：2 Medium Bloom's：Understand
题目 7Intra-Industry Trade
Which of the following refers to a two-way trade in which a country both exports and imports the same or very similar products?
- A) Net trade
- B) Inter-industry trade
- C) Intra-industry trade
- D) Internal trade
正确答案：C | Intra-industry trade
难度：1 Easy Bloom's：Remember
题目 8Intra-Industry Trade
Which of the following is the formula for the intra-industry trade (IIT) share in a product's total trade?
- A) 1 - |X - M|
- B) 1 - (X + M)
- C) 1 - [ |X - M| / (X + M)]
- D) 1 - [ |X + M| / (X - M)]
正确答案：C | 1 - [ |X - M| / (X + M)]
难度：2 Medium Bloom's：Understand
题目 9Intra-Industry Trade
Suppose the amount of exports of textile machinery from Italy to the rest of the world equals 60 billion tons. The amount of imports of textile machinery into Italy from the rest of the world is 40 billion tons. Therefore, the intra-industry trade share for machinery is
- A) 0.2.
- B) 0.8.
- C) 1.5.
- D) 0.67.
正确答案：B | 0.8.
难度：3 Hard Bloom's：Apply
题目 10Intra-Industry Trade
Which of the following is true of intra-industry trade?
- A) Intra-industry trade is mostly based on the differences stressed in the Heckscher-Ohlin trade theory.
- B) Intra-industry trade is usually discouraged by the government.
- C) Intra-industry trade is said to occur when the United States exports Ford automobiles and imports Honda automobiles.
- D) Intra-industry trade is said to occur when the United States exports Ford automobiles and imports petroleum.
正确答案：C | Intra-industry trade is said to occur when the United States exports Ford automobiles and imports Honda automobiles.
难度：2 Medium Bloom's：Understand
题目 11Intra-Industry Trade
Which of the following can help explain the rise of intra-industry trade?
- A) Recent recessions and increases in the price of oil have led to lower national income levels.
- B) The demand for product variety has increased substantially over time.
- C) Countries widely vary in terms of their resource endowments.
- D) The developed nations have recently implemented more conservative fiscal policies.
正确答案：B | The demand for product variety has increased substantially over time.
难度：2 Medium Bloom's：Understand
题目 12Intra-Industry Trade
Which of the following indicates the difference between the volume of exports and imports of a product?
- A) Net trade
- B) Intra-industry trade
- C) Total trade
- D) Terms of trade
正确答案：A | Net trade
难度：1 Easy Bloom's：Remember
Manual Preview
教师手册摘录
Scale Economies, Imperfect Competition, and Trade
Standard trade theory presented in Chapters 3-5 is based on perfect competition, with constant returns to scale at the level of the individual firm and constant or increasing cost of expanding production at the level of the industry. Comparative advantage predicts that countries will trade with other countries that are different (the source of the comparative cost differences) and that each country will export some products and import other, quite different products. While much international trade conforms to these patterns, a substantial amount does not. Most obviously, industrialized countries trade a lot with each other, and in much of their trade each is exporting and importing similar products.
This chapter looks at three theories of trade based on market structures that differ from the standard theory. Each of these theories includes a role for scale economies, so that unit costs tend to decline as output increases. The first section of the chapter defines and examines scale economies, and it explains the difference between scale economies that are internal to the individual firm, and scale economies that are external to the firm but apply to a cluster of firms in a geographic area.
The next section of the chapter defines intra-industry trade (IIT), in which a country both exports and imports the same product or very similar product varieties. It explains how IIT is measured for an individual product, with examples shown in Figure 6.2. The importance of IIT in a country’s overall trade is the weighted average of the IIT shares for each of the individual products. Figure 6.3 provides original estimates of the overall importance of IIT.
Slide Outline
课件线索
- Scale Economies
- Internal Scale Economies
- External Scale Economies
- Intra-Industry Trade
- Measuring Intra-Industry Trade
- How Important is Intra-Industry Trade?
- What Explains Intra-Industry Trade?
- Monopolistic Competition and Trade
- The Market with No Trade
- Opening to Free Trade
- Gains from Trade
- Global Oligopoly
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