ECON 223 Lecture Notes - Lecture 8: Price Discrimination, Monopolistic Competition, Most Favoured Nation
1 Apr 2017
School
Department
Course
Professor
Document Summary
Econ 223 chapter 7: external economies of scale and the international location of. Production/ chapter 8: firms in the global economy: export decisions, outsourcing, and. In the ricardian and heckscher-ohlin models, we assume that production processes have constant returns to scale: when factors of production change at a certain rate, output increases at the same rate. The ricardian and heckscher-ohlin models also rely on competition to predict that all income from production is paid to owners of factors of production: no excess or monopoly profits exist. But when economies of scale exist, large firms may be more efficient than small firms, and the industry may consist of a monopoly finish. Economies of scale could mean either that larger firms or a larger industry is more efficient. External economies of scale occur when the cost per unit of output depends on the size of the industry but not necessarily on the size of any one firm: ex.
