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    The document summarizes the new trade theory proposed by Krugman and how it differs from classical trade theory. [1] The new trade theory focuses on factors like economies of scale, network effects, and first-mover advantages that can drive trade between similar countries. [2] It also explains how trade can increase market size and decrease costs, benefiting consumers. [3] The classical theory focused on comparative advantages between countries with different resources, while the new theory allows for trade patterns between similar countries and a role for government intervention.

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    New trade theory prezentation

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    New trade theory Anel Bayan

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    The document summarizes the new trade theory proposed by Krugman and how it differs from classical trade theory. [1] The new trade theory focuses on factors like economies of scale, network effects, and first-mover advantages that can drive trade between similar countries. [2] It also explains how trade can increase market size and decrease costs, benefiting consumers. [3] The classical theory focused on comparative advantages between countries with different resources, while the new theory allows for trade patterns between similar countries and a role for government intervention.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    13 views10 pages

    New Trade Theory Anel Bayan

    Uploaded by

    123 ArAkh
    The document summarizes the new trade theory proposed by Krugman and how it differs from classical trade theory. [1] The new trade theory focuses on factors like economies of scale, network effects, and first-mover advantages that can drive trade between similar countries. [2] It also explains how trade can increase market size and decrease costs, benefiting consumers. [3] The classical theory focused on comparative advantages between countries with different resources, while the new theory allows for trade patterns between similar countries and a role for government intervention.

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    of 10

    NEW TRADE

    THEORY BY
    KRUGMAN AND
    ITS ANALYTICAL
    EXPLANATION
    DONE BY ANEL MURZABEKOVA,
    BAYAN NIYAZBEK
    CONTENT

    1. Introduction: Factors
    2. Increasing product variety and reducing costs
    3. The main differences between the new trade
    theory and classical trade theory
    4. Examples
    5. Conclusion
    6. List of references
    New Trade
    Theory

    Globalization

    Economies Of Scale

    Extensive trade
    among similar
    nations

    Network Effects
    International
    Trade Poor nations lack
    economies of scale so
    less industrialized

    First-Mover Advantage
    The new trade theory

    Engaging in international trade increases


    market size decreases the average
    cost .
    When countries engage in international
    trade increases a variety of goods
    consumers can buy also increases
    consumer welfare.
    THE CLASSICAL TRADE THEORY VS THE NEW TRADE THEORY

    The classical trade theory The new trade theory

    comparative economies of scale,


    Focus advantage Focus network effects,
    first-mover
    theory
    advantages

    perfectly industries are


    Market Market
    dominated by a
    competitive structure
    structure few large firms
    market
    THE CLASSICAL TRADE THEORY VS THE NEW TRADE THEORY

    The classical trade theory The new trade theory

    only Countries with possible between


    Trade different factor Trade
    Countries with
    patterns endowments patterns similar factor
    (e.g. labor, capital) endowments

    Government governments Government government


    shouldn't interfere, intervention intervention can
    intervention
    free trade is be beneficial
    beneficial
    Example #1 Nokia
    50
    SMARTPHONE MARKET SHARE

    Nokia
    40
    Apple

    RIM

    30 Samsung

    HTC

    20 Motorola

    Others

    10

    0
    Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011
    Example #2 TESLA

    TESLA gained a monopoly in the market:

    Being the first mover into EV;


    s Getting subsidies from the American

    government;
    Having economies of scale due to huge
    funding available;
    Rising value of its cars, creating
    network effects.

    2020
    REFERENCES

    Международная экономика _Киреев А.П


    Charless Hill-International Business
    New Trade Theory https://www.wallstreetmojo.com/new-trade-theory/
    Trade in conditions of monopolistic competition
    https://economics.studio/mejdunarodnaya-ekonomika/torgovlya-usloviyah-
    monopolisticheskoy-83657.html
    New Trade Theory
    https://www.economicshelp.org/blog/6957/trade/new-trade-theory/
    https://electrek.co/2022/11/29/tesla-owns-us-ev-market-but-losing-market-shares-
    data/
    THANK
    YOU

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