BSB119 Lecture Notes - Lecture 2: Internalization Theory, New Trade Theory, Wassily Leontief
Document Summary
Include a number of sources such as the ability so spread fixed costs over a large volume and the ability of large-volume producers to utilize specialized employees and equipment that are more productive than less specialized equipment and employees. Trade can increase the variety of goods available to consumers and decrease the average cost of those goods. Industries were the output required to attain economics of scale representations a significant proportion of total world demand, the global market may only be able to support a small number of enterprises. Thus, world trade may be dominated by firms who were the first movers in their production. Firms with first mover advantages will develop economies of scale and create barriers to entry for other firms: first mover advantage: the economic and strategic advantages that accrue to many entrants into an industry. The ability to capture scale economies ahead of later entrants and thus.
