Modern Trade Theory ReviewModern Trade Theory Review

Characteristics of Pure CompCharacteristics of Pure CompMkt. S, D.Mkt. S, D. Profits and entryProfits and entryLoss and exit. LR. costs covered, Loss and exit. LR. costs covered, no NR>0,no NR>0,

Characteristics of Monopoly (X,P) Characteristics of Monopoly (X,P) Standard diagram, Totals diagramStandard diagram, Totals diagramEntry blocked. NR>0. Comp. and Entry blocked. NR>0. Comp. and Reg. P. discriminationReg. P. discrimination

Characteristics of Oligopoly. Few. Characteristics of Oligopoly. Few. Interdependence and uncertainty.Interdependence and uncertainty.Comp., price wars, stability, Comp., price wars, stability, cartels.cartels.

Characteristics of monopolistic Characteristics of monopolistic comp. Numbers = no interd. comp. Numbers = no interd. Entry/costs vs. different. Profits vs. Entry/costs vs. different. Profits vs. Licensing.Licensing.

America, home of big 3. Why America, home of big 3. Why import cars? What does Ricardo import cars? What does Ricardo say? What does Leontief say? Big say? What does Leontief say? Big 3 oligop. vs. world oligop. IIT.3 oligop. vs. world oligop. IIT.

IIT = Intra-industry TradeIIT + Inter-industry trade = 1, orIIT = 1 - Inter-industry trade.IIT = 1 – share of XM not matched by offsetting MX.All trade is IIT if we export as many cars as we import and import as many designer jeans as we export.

In Modern Theory, traded gs and ss=global markets. Why are wheat and cars global?Low transp costs, econs of scale, Internal/external. History (qwerty) matters.

What kinds of markets? Monop? Pure comp? Oligop? M.Comp? (Prod diff and tastes)