Chapter6双语国贸学6章规模经济2课件

1、Chapter 6 Economies of scale、imperfect competition and trade(New International Trade Theory )1第1页，共57页。Contents1. Introduction2. Economies of scale and market structure3. Intra-industry trade4. Summary第2页，共57页。Part I . Introduction 1. The background of the emergence and development of new internatio

2、nal trade theory 2. The focus of New international trade theory 3. The relationship between New international trade theory and traditional trade theory 第3页，共57页。Part I . Introduction1. The background of the emergence and development of new international trade theory Traditional theories could not ex

3、plain the dynamic economies in the real world. 第4页，共57页。Based on Classical trade theory, the trade pattern among countries is as follows: labor abundant countriesexport labor- intensive products capital abundant countries export capital-intensive products inter-industry trade第5页，共57页。Trade share of

4、developed countries (1970s-80s) (%)DCs19701987USA55.161.0Japan32.828.0Germany59.766.4France78.183.8England64.380.0Italy61.063.9Canada62.471.6Average56.865.3Intra-Industry trade第6页，共57页。Export and import among developed countries(2019)X to DCs (%)M from DCs (%)USA5753England7773Canada9584Japan5444Ger

5、many7673France7981Total7368第7页，共57页。Intra-industry trade inter-industry trade Intra-industry trade among developed countries exceeded inter-industry trade between developed and developing countries After the 1960s, the “North-North TradeNorth-South Trade The above situation was unable to be explaine

6、d by Classical/neo-classical trade theory第8页，共57页。 (2) One of assumptions of classical trade theory is that there is Perfect competition in all markets. Perfect competition: Producers are market price takers without dominant powers and price control.第9页，共57页。GMFrom the 1950s-1970sMarket share: 60%Em

7、ployee: 618000Annual capital return: 20%第10页，共57页。Shares of the US Motorbike market (the 1960s)Harley Davidson, USABSA, UKMoto-Guzzi, ItalyHonda, JapanImperfect competition in markets第11页，共57页。International market share: 75%The US market share: 65% Market share in China: 40%第12页，共57页。The above cases

8、 indicate:Imperfect competition in marketsBig companies are market price setters.Big companies have strong competitive power.第13页，共57页。Where does the firms competitive power stem from?Firms competitive powerScale economiesReturns to scale Imperfect competitionIntra-industrialtrade第14页，共57页。2. The fo

9、cus of new international trade theoryEconomies of scale (pp.82-84)Imperfect competition (pp.88-94)Intra-Industry Trade (pp.84-88)第15页，共57页。3. The relationship between New international trade theory and traditional trade theory Difference between the two theories:(1) Both of them explained different

10、phenomenon of trade. The former explained intra-industry trade between developed countries, while the latter focused on inter-industry trade between the developed and developing countries第16页，共57页。(2) Theoretical basis is different. The former is based on economies of scale and imperfect competition

11、, and the latter relied on constant returns to scale and perfect competition. Therefore, the relationship between them is not substitutes (替代) but complementary(互补). Both of them made contribution to develop the system of international trade theory. 第17页，共57页。Part II Economies of scale and market st

12、ructureThe definition of economies of scaleEconomies of scale: (1) Internal economies of scale (2) External economies of scaleEconomies of scale and market structure (1) market structure (2) Internal- monopoly (3) External competition 第18页，共57页。1. The definition of economies of scale (p. 83) With th

13、e expansion of production scale, the output per unit of factor input will increase ,and the average cost of products will decline.第19页，共57页。Scale economies (pp.82-83)Cost per unit($ per unit)Quantity(thousands per year)25265023752110020AveragecostAverage cost is declining and output increases When p

14、roduction reaches 100000 units.第20页，共57页。e.g.: Economies of scale in AutomobileCars output (yearly) 100050000Cars cost 40% Cars output50000100000Cars cost 15%第21页，共57页。Economies of scale and return of scale There are three returns that are associated with economies of scale(increasing returns to sca

15、le、 constant returns to scale、 decreasing returns to scale) If the output per unit of factor input and the average cost of products with the expansion of production scale, it indicates “increasing returns to scale规模报酬递增第22页，共57页。KLRABC-q =100q =300q =60024624 60Increasing returns to scale第23页，共57页。K

16、 = quantity of capital inputL = quantity of labor inputq = outputR = curve of returns to scaleA、B、C = the expansion point of productive scale第24页，共57页。Before & after economies of scaleOutputFactor input (total)Factor input(per unit)110 hours10 hours5003000 hours 6 hours50000150000 hours 3 hoursPre-

17、After-第25页，共57页。 Constant returns to scale: (p.82) In production scale, the average cost of the product has reached the lowest point, and will not decline because of production increases. This stage is called the “constant returns to scale规模报酬不变.“第26页，共57页。e.g.Factor input 1%Output increase 1.30% in

18、creasing returns to scaleFactor input 1%Output increase 1% constant returns to scale第27页，共57页。Constant returns to scale (p.82)Cost per unit($ per unit)Quantity(thousands per year)25265023752110020AveragecostWhen output levels exceeds 100000 units,the average cost curve shows a flat line(=Constant re

19、turns to scale)Output 100第28页，共57页。Decreasing returns to scale: When the scale of production continues to expand, the average cost of production does not continue to decline. Because the scale is too large and decreases the efficiency of management and co-operation. This phenomenon is called “decrea

20、sing returns to scale“规模报酬递减.8/16/202229第29页，共57页。e.g. Gelanshi firmMicrowave output (maximize): 12millionDemand of the world market: 15million If the firm expands to produce microwave, it would increase retail cost and management cost. Meanwhile, the quality of goods might decrease. If: its output

21、input = decreasing returns to scale(To keep increasing returns to scale ,the firm invested 2billion to air conditioning after 2000)第30页，共57页。Output(yearly)Compensation:$ 15million to USA2019第31页，共57页。Average costs and economies of scale (long-term )declineconstantriseEconomies of scaledecreasing ret

22、urns to scaleLACQcostO32LAC: long-term Average costsQ: outputIP: inputQ: outputIP: 1%Q: 1.50%IP: 1%Q: 1%IP: 1%Q: 0.50%第32页，共57页。2.Economies of scale1)Internal economies of scale（.82). The average cost of firms decline with the expansion of production scale of individual firm. IP: 1%Q: 1.50%第33页，共57页

23、。Internal economies of scale-ACAC1AC2ACQ1Q2QAC: the firms average cost of productionQ: outputAC1: before IESAC2: after IESOutput increases from Q1 to Q2, and average cost decreases from AC1 to AC2.第34页，共57页。The standard of economies of scale of firmProductsOutput(yearly)ProductsOutput(yearly)Ethylen

24、e 乙烯30万吨Oil refining 炼油500万吨Car150万辆Video recorder 录像机60万台Electrolytic aluminum 电解铝10万吨Chip 芯片25万片第35页，共57页。Auto-Firms Output (yearly, thousand)GMC9000Ford6000Chrysler5000Volkswagen5000PSA3350Toyota4760Honda2340Nissan2100Daewoo3210Mitsubishi1500第36页，共57页。Video第37页，共57页。Table: Factor Endowments of Le

25、ading Industrial Countries, as a Percentage of the World Total in 1980 Semi- All Physical R&D Skilled Skilled Unskilled Arable Resources Country Capital Scientists Labor Labor Labor Land (1982 GDP)U.S. 33.6% 50.7% 27.7% 19.1% 0.19% 29.3% 28.6%Japan 15.5 23.0 8.7 11.5 0.25 0.8 11.2W. Germany 7.7 10.0

26、 6.9 5.5 0.08 1.1 7.2France 7.5 6.0 6.0 3.9 0.06 2.6 6.0U.K. 4.5 8.5 5.1 4.9 0.09 1.0 5.1Canada 3.9 1.8 2.9 2.1 0.03 6.1 2.6Rest ofWorld 27.3 0.0 42.7 53.0 99.32 59.1 39.3 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%第38页，共57页。External scale economies (p. 84)means the size of an entire industry w

27、ithin a specific geographic area, and thus the transaction costs ( information , product sales and other aspects) decline. 第39页，共57页。External economies of scale-PLRACQLRAC: the industrys average cost of productionQ: firm quantity/sizeP: priceA: Firms marginal costB: Industrys marginal costABP1P2Q1Q2

28、第40页，共57页。Average Versus Marginal CostMarginal cost(MC) = TC(tatol cost) Q(quantity)Average cost(AC) = TC TQ(tatol quantity)AC MC = AC(ES exist)第41页，共57页。Case study: The external economies of scale in Silicon valleyGDP GDP of KoreaE.Export share: 1/3 of US 第42页，共57页。Concentration of relative industr

29、ies in Silicon valleyR & D of new products is 60% more fast rest of US.第43页，共57页。Greater local supplies of specialized servicesDelivering is 40% fast than rest of US第44页，共57页。Large pooling of specialized labors第45页，共57页。Knowledge and technologic spilloversLabors are frequent mobility : 35%-59% Techn

30、ology diffuses quickly among firms in the area第46页，共57页。Which one is the internal economies of scale or external economies of scale?1.Eating street of Chongqing2. Hollywood3.The digital square of Gangding, Guangzhou4第47页，共57页。E1.2.3.I4.5第48页，共57页。(2) Internal- monopoly(3) External competition 3.Econ

31、omies of scale and market structure(1) Market structure第49页，共57页。(1)Market structurePerfectly competitivemarketFirms are price takers. None of them represents a large part of a marketImperfectly competitivemarketPure monopoly A market in whicha firm faces no Competition. The firm is pricesetter. MonopolisticcompetitiveMarket(8