The so-called New International Economics (alternatively, Strategic Trade Theory) explores situations where markets economic conditions depart from standard conditions – because of market power, economies of scale, externalities, etc. Economists have shown that it is theoretically possible for government intervention to improve national incomes. This note unpacks several Strategic Trade models, and seeks to explain the logic behind each. It concludes with several critiques of the models. The note complements and expands on the material in Trade and Comparative Advantage (WDI note # 1-428-934).
Note on Theories of Strategic Trade Beyond Comparative Advantage
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