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An industry is characterized by internal economies of scale and exists in two countries. If the two countries engage in trade, how does each country

An industry is characterized by internal economies of scale and exists in two countries. If the two countries engage in trade, how does each country gain from trade? How does it affect the consumers? How do firms respond to trade? Hint: firms in this industry produce similar but differentiated products, which suggest that each firm faces different cost curves.

 

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