According to the theory of monopolistic competition in the 1930s, the competition between companies is not only on price but also on the products. Each company has a monopoly on a product that is not strictly identical to those of competitors. If one is interested in the application of this theory of international trade is found that:
• saw the creation of a new product is limited only by the size of the market, while the opening to world trade can increase the variety of goods, enabling a better adjustment of supply to specific requests consumers.
• International trade is intra-industry way: a country can both import and export the same product category.
Increasing returns to scale and network effects
Economies of scale can justify international specialization. Taking two countries similar in all respects : same technical level, same factor endowments , same size and consumers have varied tastes the same ... and if we take two goods produced in the same conditions but with yields growing in both countries , we show that despite the similarity of the comparative costs would justify no exchange between the two countries , each country may find it advantageous to specialization and international trade for more goods in autarky : international trade allows each country to produce a limited property without sacrificing the variety of goods consumed register more effectively. Indeed, the increase in production in a property generates productivity gains through economies of scale, and therefore a comparative advantage. But it is not the result of initial differences between the two countries since assumed they were perfectly similar, however, this comparative advantage is rooted in the specialization itself, sought to benefit from increasing returns. That is why this explanation of "endogenous theory" of international trade is termed because it is the specialization and international trade that create competitive advantage from the phenomenon of economies of scale.
There are a number of the most famous being the Farmington model business models of international trade. These models are mainly used by economic institutes and central banks. It is less to construct a theory as is the case with previous models to build a framework to predict the levels of exports and imports.
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