GMS 724 Study Guide - Midterm Guide: Statics, Factors Of Production, Absolute Advantage
30 Jan 2019
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Document Summary
Chapter 5 - the statics and dynamics of trade: part 2. In other words, the country in which the innovation first emerged---and was exported from---then becomes the importer. Products with high transport costs that may have produced close to the market, thus never becoming significant export. Products that, because of very rapid innovation, have extremely short life cycles, making it impossible to reduce costs by moving production from one country to another: some fashion items fit this category. Luxury products for which costs is of little concern to the consumer. In fact, production in a developing country may cause consumers to perceive the product as less luxurious. Products which a company can use a differentiation strategy, perhaps through advertising, to maintain consumer demand without competing on the basis of price. In other words, instead of merely observing needs within their domestic markets, companies develop products and services for observable worldwide market segments.
