An accompanying verbal explanation

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Reference no: EM13334326

Draw a two-country, two product trade model in which production in both industries is subject to increasing returns to scale. That is, draw diagrams for two countries in which the possibilities-possibilities frontier reflects increasing returns to scale. Then make additional assumptions (clearly stated) and show how trade between the two countries affects well-being in both countries. Does trade under increasing returns to scale still make both countries better off, as the constant-returns-to-scale H-O model shows? Answer this question using both your diagram and an accompanying verbal explanation.

Reference no: EM13334326

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