Increasing Returns, Monopolistic Competition, and International Trade.

Krugman, P. R. (1979). Increasing Returns, Monopolistic Competition, and International Trade. Journal of International Economics, 1996(79), 469-479.

Type

Journal article

Intellectual base

Primary research

Year

1979

DOI

10.1016/0022-1996(79)90017-5

Link

https://doi.org/10.1016/0022-1996(79)90017-5

Cited from

economics_finance

Cited by

6 citations across 4 artifacts.

Each citation links to the sentence it supports in the citing article.

Primes

• Comparative Advantage
  • Not identical to the reason for all observed trade: a great deal of trade is intra-industry (French cars traded for German cars), which is not well-explained by comparative advantage and is instead explained by increasing returns, product differentiation, and monopolistic competition.

    This sourceCanonical treatment: Krugman, Paul R. "Increasing Returns, Monopolistic Competition, and International Trade90017-5)." Journal of International Economics, vol. 9, no. 4 (1979): 469–479.

  • Krugman's new-trade-theory models

    This sourceFoundational 'new trade theory': intra-industry trade and gains from variety arise from increasing returns and product differentiation even between identical countries; supports the prime's T4 intra-industry claim. (Basis, with later work, for Krugman's 2008 Nobel Memorial Prize.)

• Diminishing Returns (Law of)
  • At the firm level, Krugman (1979/1980)

    This sourceNew-trade-theory models in which scale economies and product variety drive trade and industry-level increasing returns even as individual firms face diminishing returns — supports the prime's firm-level-diminishing vs. industry-level-increasing-returns claim. Basis for Krugman's 2008 Nobel Memorial Prize.

• Economies of Scale
  • In modern microeconomic theory, scale economies underpin the distinction between constant, increasing, and decreasing returns to scale production functions, and they are central to Paul Krugman's Nobel-prize-winning new trade theory (Krugman 1979, 1980, 1991)

    This sourceFounds 'new trade theory' by deriving trade and gains from trade from internal economies of scale and product differentiation even between identical countries; supports the inline claim that scale economies are central to Krugman's Nobel-winning new trade theory.

• Gains from Trade
  • - T3: Static Comparative Advantage vs Dynamic Learning and Industrial Policy. (Krugman (1991) extended new-trade-theory mechanisms (Krugman 1979)

    This sourcePioneering new-trade-theory model showing intra-industry trade and gains arise from scale economies and product variety even between identical countries; supports the T3 reference to new-trade-theory mechanisms.

  • … new trade theory in the late 1970s and 1980s added increasing returns to scale and product differentiation, explaining why similar countries trade heavily with each other — gains from trade need not depend on large comparative-advantage gaps when economies of scale and love-of-variety amplify small differences.

    This sourceFoundational 'new trade theory' papers: gains from trade arise from increasing returns and product variety even between similar countries; basis (with later work) for Krugman's 2008 Nobel.

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