Conditions of domestic internal scale economies, International Economics

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Q. Why is it that an industry is performing under conditions of domestic internal scale economies (applies to firm in the country) - then the resultant equilibrium can't be consistent with the pure competition model?

Answer: For the reason that once one firm became bigger than another or if one firm began the industry then no other firm would be able to match it's per unit cost therefore that they would be driven out of the industry.


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