【正文】 ) ?? Resulting from economies of scale, factor ?mobility and innovation Kemp Model ?Kemp model implications of increasing returns to scale ?Two goods and two countries, (goods X and Y) ?both goods have increasing returns to scale in production ?economies of scale are such that the ppf is convex to the origin (economies of scale do not always imply a convex ppf) ?economies of scale are EXTERNAL to the firm, and pertain to the industry Kemp continued ? there are three possible equilibria ? 1. only good X is produced ? 2. only good Y is produced ? 3. both goods are produced, and ppf is tangent to indifference curve (NOT A STABLE equilibrium) ? If economy happens to be at equilibrium 3, and country starts to trade, it will move to either 1 or 2, depending on the terms of trade. ? pattern of trade may depend on historical accident, since for some TOT production of either good is preferable to production of both goods Kemp continued ?In the diagram ?At TOT1 only X is produced ?At TOT2 only Y is produced, ?At TOT3 either only X, or only Y or some mixture is produced (who knows) ?note: the middle equilibrium is unstable, and can only occur by coincidence ?With economies of scale if two countries have same ppf and same tastes and therefore same PX/PY they can still gain from trade Kemp39。 of the world trade Introducing Trade to the Monopolistic Competition Model ? Suppose the costs of a firm take the form C = F + c x Q (1) ? The fixed cost gives rise to economies of scale, because the larger the firm?s output, the less is fixed cost per unit ? The firm?s average cost (total cost divided by output) is AC = C/Q = F/Q + c (2) ? The firm?s marginal cost (amount it costs the firm to produce one extra unit) is c ?where: –Q is the firm?s sales –S is the total sales of the industry –n is the number of firms in the industry –b is a constant term representing the responsiveness of a firm?s sales to its price –P is the price charged by the firm itself –A particular equation for the demand facing a firm that has these properties is: Q = S x [1/n – b x (P – P)] (3) –P is the average price charged by its petitors ?Assume all firms in this industry are symmetric, . identical demand and cost functions for all firms ?The method for determining the number of firms and the average price charged involves three steps: ?To derive a relationship between the number of firms and the average cost of a typical firm (CC curve) ?To derive a relationship between the number of firms and the price each firm charges (PP curve) ?To derive the equilibrium number of firms and the average price that firms charge (intersection between CC and PP) Market Equilibrium – How do the average costs depend on the number of firms in the industry? – Under symmetry, P = P, equation (3) tells us that Q = S/n but equation (2) shows us that the average cost depends inversely on a firm’s output – We conclude that average cost depends on the size of the market and the number of firms in the industry: AC = F/Q + c = n x F/S + c (4) – The more firms there are in the industry the higher is the average cost as shown by the CC curve in Figure 3 below ?The number of firms and the price ?The price the typical firm charges depends on the number of firms in the industry ?The more firms, the more petition, and hence the lower the price ?In the monopolistic petition model firms are assumed to take each others? prices as given The Theory of Imperfect Competition – If each firm treats P as given, we can rewrite the demand curve (5) in the form: Q = (S/n + S x b x P) – S x b x P (5) ?Profitmaximizing firms set marginal revenue equal to their marginal cost, c ?This generates a negative relationship between the price and the number of firms in the market which is the PP curve: P = c + 1/(b x n) (6) ?The more firms there are in the industry, the lower the price each firm will charge The Theory of Imperfect Competition AC = F/Q + c = n x F/S + c Numerical Example: ? Cars produced by a monopolistically petitive industry ? b = 1/30,000 ? F = $750,000,000 ? c = $5000 ? Two countries (Home and Foreign) with the same costs of automobile production ? Annual sales of automobiles are 900,000 at Home and million at Foreign Monopolistic Competition and Trade )](1[ ppbnSQ ??? Explaining Trade Patterns ?? Interindustry trade reflects the parative ?advantage ? the pattern of trade is determined by relative factor endowments / technological differences ?? Intraindustry trade reflects economies of scale ?the pattern of trade is unpredictable ?The relative importance of the two kinds of trade ?depend on how similar the countries are Other Explanations of IntraIndustry Trade ?? Transport costs in large countries ?(. a buyer in Maine buys the Canadian rather than the Californian product) ?? Dynamic economies of scale: ?product differentiation + learningbydoing ?? Problems with statistics ?Aggregation: the categories are too wide (. “beverages and tobacco”) ? Different quality of goods inside a product category Domestic monopolies ? Domestic monopoly entering world markets ?? Single monopoly amp。 4 含中間投入的一般均衡模型 4 中間投入和非貿(mào)易部門模型 （ 2） 非貿(mào)易部門模型（ Nontraded sector） ? 在經(jīng)濟實踐中 ， 有相當部分的產(chǎn)品不參加貿(mào)易 ， 因此必須引入非貿(mào)易產(chǎn)品部門和非貿(mào)易品的價格 。 在這里主要討論第一種情況 。 KLAX