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External scale economies or agglomeration economies: expansion of the
size of the industry within a specified geographic area is the basis for the decline in the typical local firm’s average cost as the over all production quantity for the industry in this geographic area increases.
?Questions(习题)
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The production of one unit of good X requires one unit of labor and one
unit of capital. When 2 units of labor and 2 units of capital are employed in the production process, 3 units of good X are produced. This phenomenon is called: (3)
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monopolistic competition（垄断竞争） biased growth（偏向型增长或不平衡性增长） economies of scale（规模经济） product differentiation（产品差异化）
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Economies of scale are more likely to be found in:(1) the auto industry.（汽车产业） gasoline stations（汽油站）
firms operating in perfectly competitive markets（完全竞争市场的厂商） economics departments（经济部门）
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2. Intra-industry trade（产业内贸易）
（1）Intra-industry trade: Two-way trade in a product, in which a country both exports and imports the same or very similar products (products in the same industry)（一种产品的双向贸易，即同类产品或是相似产品既有出口又有进口）
?How to measure IIT?（如何衡量产业内贸易）
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Inter-industry vs. Intra-industry（产业间贸易与产业内贸易对比）
Inter-industry: measured by net trade which is the value of the
difference between exports and imports for the product
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Intra-industry: measured by ratio of IIT
?How to explain IIT?（如何解释产业内贸易）
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Product differentiation（产品差异化）
?SITC: 类、章、组、分组、项目
如 7 2 1 1 1
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The IIT share is a number between 0 and 1.
Product differentiation（产品差异化）: Consumers view the products (or product varieties) offered by firms in an industry as being close but not perfect substitutes for each（消费者认为某一产业的各个厂商提供的产品的各个品种是相近的但是又不是完全可以替代的即产品差异化）
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Demand side and supply side cause to IIT happen. How?
?Question:（习题）
?Which countries are most likely to participate in intra-industry trade?
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countries with high incomes developing and developed countries eastern and western countries developing countries
Question:（习题）
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if IIT=0, all trade is inter-industry or intra-industry? if IIT=1, all trade is intra-industry or inter-industry?
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?E.g.（习题）
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If U.S exported $27.39 billion of computers and imported $47.65 billion
of computers in 2001
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Net trade (or inter-industry trade): 27.39-47.65=-20.26 Intra-industry trade: 27.39*2=54.78
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3. Monopolistic competition and trade (垄断竞争和贸易)
Monopolistic competition（垄断竞争P94）
A market structure in which products are differentiated, internal scale economies in production are modest or moderate, and entry and exit of firms is easy in the long run, so that a large number of firms compete vigorously with each other in producing and selling varieties of the same
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basic product.
(1)Monopolistic competition before trade（贸易前的垄断竞争市场）
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Demand curve is downward-sloping （需求曲线是向下倾斜的）
The firm maximizes its profit when MC=MR（当边际受益等于边际成本时厂
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商的利润最大）
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Free entry and exit causes the profit is zero, demand curve will just
touch the average cost curve.（自由进出市场导致经济利润为零，需求曲线将与平均成本曲线相交）
Figure 6.2 – A Monopolistic-Competitive Firm in a Market Before Trade Opens
（2）Monopolistic competition after trade（贸易后的垄断竞争市场）
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Firm will face new demand curve D2 which is more elastic than before trade
demand curve D1 (why?)（厂商将面临比贸易前D1更具有弹性的一条新需求曲线D2）
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The firm maximizes its profit when MC=MR
Free entry and exit causes the profit is zero, demand curve will just
touch the average cost curve.
Figure 6.3 – The Same Monopolistic Competitor in an Automobile Market
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after Opening Trade
(3)Basis for trade(贸易的基础)
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Economies of scale encourage production specialization for different
varieties within the same industry（规模经济鼓励同一产业内部不同品种的专业化生产）
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Net trade in a product can be the result of endowment difference or the
difference in international marketing capabilities or the shifting consumer tastes.（某种产品的净贸易可能是由于禀赋的差异或是国际营销能力的差异或是消费者偏好的转变的结果）
（4）Gains from trade under monopolistic competition（贸易的利益）（P101）
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Increase in the number of varieties of products（产品品种数量的增加） Lower the prices of domestic varieties（降低了国内产品的价格）
Question?（练习）
Is the impact on the domestic distribution of factor income same from inter-trade and from intra-trade ?
4. Oligopoly and trade(寡头垄断与贸易)
Oligopoly（寡头垄断市场结构）
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A market structure in which a few large firms dominate total industry sales, perhaps because of substantial internal scale economies (or other barriers to entry)。（寡头是指少数大型厂商统治了整个产业的销售，或许由于巨额的内部规模经济或是其他的一些进入壁垒）
（1）Substantial scale economies（巨大的内部规模经济）
Production locations——internal scale economies(生产区位——内部规模经济)
（2）Oligopoly pricing(寡头市场定价权)
①Game among oligopoly firms（寡头垄断厂商之间的博弈）
②Oligopoly firms are interdependences（寡头厂商之间是相互依存的关系）
③Prisoners′ dilemma（囚徒困境）(P105)
④Pricing matters for the division of the global gains from trade(定价权对全球贸易利益分配有重要影响)
5. External scale economies and trade（外部规模经济与贸易）
（1）External economies magnify an expansion in a competition industry （外部规模经济扩大了竞争产业的扩张）
（2）What explains the pattern of trade that emerges in industries subject to external scale economies（如何解释具有外部规模经济的产业贸易模式） History matters（历史是至关重要的）
Figure 6.7 – External Economies Magnify an Expansion in a Competitive Industry
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