New Trade Theory (Krugman) The New Trade Theory (Krugman, 1980) is a theory that explains the reasons for trade between countries in the 1980s. Krugman argu...
New Trade Theory (Krugman)
The New Trade Theory (Krugman, 1980) is a theory that explains the reasons for trade between countries in the 1980s. Krugman argued that trade between countries should be based on comparative advantage, which is the ability of a country to produce goods and services more efficiently than another country. He also argued that countries should trade with each other if they have similar production capabilities.
Economies of Scale
Economies of scale are a theoretical concept that states that the average cost of producing a good or service decreases as the number of units produced increases. This means that it is more cost-effective to produce a good or service for a larger number of people