1、Chapter 6 New Trade TheoriesEconomies of ScaleImperfect Competition and TradeExternal Economies and TradeKey TermsExternal/internal economies of scaleImperfect/monopolistic competition interindustry trade intraindustry tradeOligopoly price discrimination dumping reciprocal dumping specialized suppli
2、ers labor market pooling knowledge spilloversKey Termsforward-falling supply curvedynamic increasing returns learning curveinfant industry argumentdynamic technological differencesnon-traded goodsproduct cycle modelThe Heckscher-Ohlin Model and New Trade TheoriesEconomies of scale and market structu
3、reMonopolistic competition and tradeExternal Economies and International TradeTransportation Costs,Environmental standards,and International TradeMain contents.The Heckscher-Ohlin Model and New Trade Theories1.There are two nations,and two factors of production.(factor-intensity index to predict the
4、 pattern of trade)2.Both nations use the same technology in production.(regard as a factor of production)3.Commodity X is labor intensive and commodity Y is capital intensive in both nations.(though empirical studies indicate that factor-intensity reversal is not very common in the real world,it doe
5、s exist)4.Both commodities are produced under constant returns to scale in both nations.(international trade can also be based on increasing returns to scale)5.There is incomplete specialization in production in both nations.(complete specialization)6.Tastes are equal in both nations.(more or less v
6、erified empirically)7.There is perfect competition in both commodities and factor markets in both nations.(half of the trade in manufactured goods among industrialized nations is based on product differentiation and economies of scale)8.There is perfect factor mobility within each nation but no inte
7、rnational factor mobility.(With some,but less than perfect)9.There are no transportation costs,tariffs,or other obstructions to the free flow of international trade.(they reduce the volume and the benefits of international trade,but only modify the H-O and FPE theorem)10.All resources are fully empl
8、oyed in both nations.(the full employment assumption is for the most part satisfied)11.International trade between the two nations is balanced.(could lead a nation with a trade deficit to import some commodities in which it would have a comparative advantage).Economies of Scale and International Tra
9、deExternal economies of scale occur when the cost per unit depends on the size of the industry but not necessarily on the size of any one firm.Internal economies of scale occur when the cost per unit depends on the size of an individual firm but not necessarily on that of the industry.1000,100,10SQn
10、2000,100,20SQn1000,100,10SQn1000,200,5SQnExternal economiesInternal economies.Imperfect Competition and International Trade.The theory of imperfect competition)(/1PPbnSQcSFncQFAC/cbSQPMR)/()/(bSQcPnSQ/)/(1nbcP The more the firms there are in the industry,the lower the price each firm will charge，and
11、 the higher is average cost.ConclusionECCPPNumber of firms,nCost C and price PCC and PP in Monopolistic Model1CC1 PPNumber of firms,nC,P2CC2 n2 n1 P2 P1 Effects of a larger marketSACCC1 CC2PP line?Effects of a larger marketA rise in n indicates that therere more different products produced and consu
12、mers have more choices.The decrease in p provides more consumers surplus,as well as the welfare.Monopolistic Competition and TradeMonopolistic competitioninternal economiesTrade1.the base of tradeintegrated marketCC and PP of the industry2.the pattern of trade -interindustry trade&intraindustry trad
13、eInterindustry trade:Trade in which the products of one industry are exchanged for products of another.Intraindustry trade:Two-way trade in differentiated products within an industry.vIncreased Market Size may be resulted from intraindustry tade.Home（capital-abundant）Foreign（labor-abundant）manufactu
14、resfoodHome（capital-abundant）Foreign（labor-abundant）manufacturesfoodInter-industryIntra-industryClassification of Intraindustry TradeH o r i z o n t a l intraindustry tradeV e r t i c a l intraindustry tradeMeasuring Intraindustry Trade(1)Intra-industry trade index(T)T=1-X-M X+MT0,1T=0 No intra-indu
15、stry tradeT=1 Intra-industry trade is maximumIndexes of intraindustry trade for U.S.industries,1993Inorganic chemicals0.99Power-generating industry0.97Electrical machinery0.96Organic chemicals0.91Medical and pharmaceutical0.86Office machinery0.81Telecommunications equipment0.69Road and steel0.65Iron
16、 and steel0.43Clothing and apparel0.27Footwear0.00Measuring Intraindustry Trade(2)GLIIT IndexIIT0,100=0 No intra-industry trade=100 No inter-industry trade各国和地区总产业内贸易的变化各国和地区总产业内贸易的变化我国与主要贸易伙伴国我国与主要贸易伙伴国近近12来平均产业内贸易指数来平均产业内贸易指数3.The gains from tradeProducers:larger market,larger production scale,low
17、er ACConsumers:more choices,lower pricesmutual benefitCase studyCase study9000005000/7500000005000750000000)(3000011SQACQCPPnSQ150000610000QnP1600005000/7500000005000750000000)(3000011*SQACQCPPnSQ20000088750*QnPBefore IntegrationAfter Integration25000005000/7500000005000750000000)(3000011WWWWWWWWWSQ
18、ACQCPPnSQ250000108000WWWQnP*,QQQnnnPPPWWWLower pricesFewer producersHigher productivities4.The Income Distribution Effects In the case that intraindustry trade is the dominant source of gains from tradelwhen countries are similar in their relative factor supplies,and lwhen scale economies and produc
19、t differentiation are important，5.The differences Between Interindustry Trade and Intraindustry TradeInterindustry TradeIntraindustry TradeDefinitionTrade between cloth and foodTrade between cars and carsComparative advantageReflectsDoes not reflectPattern of tradepredictableUnpredictableRelative im
20、portanceDifferent in the capital-labor ratioSimilar in the capital-labor ratioEffects on income distributionStrongweak.Dumping and Reciprocal Dumping1.The Economics of Dumping2.Reciprocal Dumping1.The Economics of Dumping Dumping is a pricing practice in which a firm charges a lower price for export
21、ed goods than it does for the same goods sold domestically.Conditions for Dumpingl1st,The industry must be imperfectly competitive,so that firms set prices rather than taking market prices as given.l2nd,Markets must be segmented.l3rd,Sales are more price-responsive in foreign market than in home.)/1
22、1(EPMRDumping:A Numerical ExampleHomeForeignSales1000100Price$20$15New salesNew price1001$19.99101$14.99Increased revenue Reduced receipts$19.99$10$14.99$1Marginal revenue$9.99$13.99Dumping Modell1st,there is a single monopolistic domestic firm in an industry.l2nd,In domestic market,the firm face a
23、down-sloping demand curve while in the export market,its demand curve is a horizontal linelThat is,export demand is infinitely price-responsive.l3rd,markets are segmented.AssumptionsDumping ModelExportsDomestic salesCost,C andPrice,PQuantities producedand demanded,QMCDFOR=MRFORMRDOMDDOM2PFORPDOM QDO
24、MQMONOPOLYTotal output132.Reciprocal Dumping The situation in which dumping leads to 2-way trade in the same product is Reciprocal dumping.Reciprocal dumping and emergence of tradeExportsDomestic salesCost,C andPrice,PQuantities producedand demanded,QMCDFOR=MRFORMRDOMDDOM2PFORPDOM QDOMQMONOPOLYTotal
25、 output13lrecognizing that if it tries to sell more it will drive down the price on its existing domestic sales,each firm will limit the quantity it sells in its home market.lIf a firm can sell a little bit in the other market,it will add to its profits even if the price is lower than in the domesti
26、c market.lSo each firm has an incentive to raid the other market,selling a few units at a price that is lower than the home market price but still above marginal cost.lIf both firms do this,the result will be the emergence of trade even though there are some transportation cost.lThere will be two-wa
27、y trade in the same product.Reciprocal dumping and welfarelOn one hand,It is obviously wasteful to ship the same goods,or close substitutes,back and forth when transportation is costly.lOn the other hand,the emergence of reciprocal dumping eliminates what were initially pure monopolies,leading to so
28、me competition.lThe increased competition represents a benefit that may offset the waste of resources in transportation.External economies and International TradeTheory of External EconomiesExternal Economies and the Pattern of TradeTrade and Welfare with External EconomiesDynamic Increasing Returns
29、P or CNumber of firmscompetitionscaleMarshalls ConflictTheory of External EconomiesConcentraded industrySpecialized suppliersLabor market poolingKnowledge spilloversothersMarshalls conflictExternal Economies and the Pattern of Trade -Strong external economies tend to confirms existing patterns of in
30、terindustry trade.-External economies potentially give a strong role to historical accident in determining who produces what,and may allow established pattern of specialization to persist even when they run counter to comparative advantage.ACSwiss 21Q1 P1 C0 QPrice,cost（per watch）ACThiland Case Stud
31、yCase StudyDTrade and Welfare with External Economies-Effects of trade on Home For Home or Switzerland,trade based on external economies results in lower price for its consumers and lower cost and larger market for its firms.So trade benefits Home.-Effects of trade on Foreign If Foreign could not pr
32、oduce thegoods at lower cost than Home,thenconsumers in Foreign is better off whilefirms will be worse off.The nationalwelfare is uncertain.In the case of higher costIn the case of lower cost It is possible that trade based on external economies may actually leave a country worse off than it would h
33、ave beenin the absence of trade.ACSwiss 21P1 C0 QPrice,cost（per watch）ACThiland P2 Dworld DThiland External Economies and Losses from Trade The world as a whole is more efficient and thus richer because international trade allows nations to specialize in different industries and thus reap the gains
34、from external economies.Dynamic Increasing ReturnsLearning Curve Dynamic external economies&Lock-in effect Infant industry argument lWhen an individual firm improves in products or production techniques through experience,other firms are likely to imitate the firm and benefit from its knowledge.lThi
35、s spillover of knowledge gives rise to a situation in which the production costs of individual firms fall as the industry as a whole accumulates experience.lThe greater the cumulative output,the lower the industry unit cost.Learning curve When costs fall with cumulative production over time,rather t
36、han with the current rate of production,this is referred to as a case of Dynamic Increasing Returns.vLike ordinary external economies,dynamic external economies can lock in an initial advantage or head start in an industry.lDynamic external economies potentially justify protectionism.lSuppose that a
37、 country could have low enough costs to produce a goods for export if it had more production experience,but that given the current lack of experience the goods cannot be produced competitively.lSuch a country might increase its long-run welfare either by encouraging the production of the goods by a
38、subsidy or by protecting it from foreign competition until the industry could stand on its own feet.Infant industry argumentv雁形模式(Flying Geese Pattern)年代，年代，”雁行模式雁行模式“的命题研究日本产业的命题研究日本产业经济结构变化；经济结构变化；年代，年代，“雁形模式雁形模式”形象地描述了形象地描述了实际形成的东亚地区内部产业转移和产业分工实际形成的东亚地区内部产业转移和产业分工的动态关系。的动态关系。日日本本香港香港新加坡新加坡台湾台湾韩国韩
39、国东盟东盟中国中国沿海沿海地区地区内地内地.The Technological Gap and Product Cycle ModelsThe Technological Gap and Product Cycle ModelsTechnological gap modelPosner in 1961Temporary monopoly in the world marketBased on patents and copyrightsProduct Cycle ModelVernon in 1966introducedmaturesstandardizedtechnologycapitall
40、aborIllustration of the Product Cycle ModelX0Mt1t2t5t6t4t3时间时间发达国家发达国家次发达国家次发达国家发展中国家发展中国家.Transportation Costs,Environmental Standards,and International Trade.Transportation Costs and Nontraded CommoditiesTransportation CostsABNontraded goods and servicesTraded commoditiesTrade barriersTransportati
41、on Costs and the Location of IndustryResource-oriented industriesMarket-oriented industriesFootloose industries-the trade volume will be less in practice,-the specialization in the real international economy is not extreme,-some goods become nontraded,-international direct investment replaces intern
42、ational trade to some degree.The results of introducing transport costs:.Environmental Standards,Industry Location,and International TradePollution-Intensive Industries,PIIs 国际上比较有代表性的是国际上比较有代表性的是Main 和和Wheeler(1997,简称简称M&W分类分类)的分类方法的分类方法,按照按照M&W的分类的分类,钢铁、有色金属、化学工钢铁、有色金属、化学工业、造纸和纸浆以及非金属矿物制品业被划分为业、造纸
43、和纸浆以及非金属矿物制品业被划分为PIIs。污染密集型产业污染密集型产业:造纸及纸制品业造纸及纸制品业;化学原料及制品业化学原料及制品业;黑色黑色金属冶炼及延压加工业金属冶炼及延压加工业;电力煤气及水供应业电力煤气及水供应业;采掘业采掘业;非金属矿非金属矿物制造业物制造业;水泥制造业。水泥制造业。低污染行业低污染行业:印刷业、记录媒介的复制印刷业、记录媒介的复制;塑料制品业塑料制品业;皮革、皮革、毛皮及其制品业毛皮及其制品业;机械、电气及电子设备制造业机械、电气及电子设备制造业;纺织业等。纺织业等。中等污染行业中等污染行业:不在上述分类中的行业不在上述分类中的行业,包括食品烟草及饮料包括食品烟
44、草及饮料制品业制品业;医药制造业医药制造业;化学纤维制造业化学纤维制造业;金属制品业等。金属制品业等。2004年江苏省利用外资产业构成年江苏省利用外资产业构成 Developing countries which have lower environmental standards tend to produce and export pollution-intensive products.ConclusionSummaryl1,Intl trade can result from economies of scale,which can be external or internal.Th
45、is chapter discusses 3 issues:the effect of intraindustry trade,trade arising from dumping,external economies and intl trade.l2,In the monopolistic competition model,trade may be divided into interindustry trade which reflects comparative advantage and intraindustry trade which reflects economies of
46、 scale.l3,Intraindustry trade leads to lower price and increased range of choices and smaller effects on income distribution than interindustry trade.4,Dumping is a profit-maximizing strategy.Reciprocal dumping can be a cause of intl trade and lead to a breakdown of pure monopoly.5,External economie
47、s give an important role to history and accident in determining the pattern of trade.Trade may not be beneficial to all countries and there may be some justification for protectionism.1.If output more than doubles when all inputs are doubled,production is said to occur under conditions of A.increasi
48、ng returns to scale.B.imperfect competition.C.intra-industry trade.D.inter-industry trade.E.None of the above.Answer A 2.The simultaneous export and import of widgets by the United States is an example of A.increasing returns to scale.B.imperfect competition.C.intra-industry trade.D.inter-industry t
49、rade.E.None of the above.Answer:C3.Intra-industry trade is most common in the trade patterns of A.developing countries of Asia and Africa.B.industrial countries of Western Europe.C.all countries.D.North-South trade.E.None of the above.Answer:B 4.History and accident determine the details of trade in
50、volving A.Ricardian and Classical comparative advantage.B.Heckscher-Ohlin model consideration.C.taste reversals.D.scale economies.E.None of the above.Answer:DQuantitative/Graphing Problems 1.The figure above represents the demand and cost functions facing a Brazilian Steel producing monopolist.If it
