Write a critical essay on scale economies, imperfect competition, and international trade.
Main objective of the assessment is to draw out the knowledge of students in the field of international trade (IT). Scale economies play a significant role in IT and students should be able to draw this out and make it stand out vis–vis other trade theories in explaining the phenomenon of IT.
Description of the Assessment
It is normally assumed in most trade theories that markets are perfectly competitive, so that all monopoly profits are always competed away. When there are increasing returns, however, large firms usually have an advantage over smaller firms, so that markets tend to be dominated by one firm (monopoly) or, more often, by a few firms (oligopoly). When increasing returns enter the trade picture, then, markets usually become imperfectly competitive. This would be the basis and starting point of the essay.
must be 3000 words or up to 3025.