[Solved]In the new trade theory, trade and gains from trade can arise independently of any pattern of comparative advantage as fir

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[Solved]In the new trade theory, trade and gains from trade can arise independently of any pattern of comparative advantage as firms exploit economies of scale and pursue strategies of product differentiation

Coursework

Instructions

Answer one question from the set of questions below. Adopt an exam-answer style. No need to copy complex tables with numbers. The answers should be based on the material covered in the lecture. Just because a quotation comes from a particular article/book does not mean that a perfect answer is to be found there. The word limit is 1000 words and you should include the word count. Your essay should be typewritten, but when you have to use some graphs in your work these can be hand-drawn. Make it clear which question you answer by copying it in full at the very beginning of your essay. Please fill in and attach the assessed coursework cover sheet to your work.

5. “In the new trade theory, trade and gains from trade can arise independently of any pattern of comparative advantage as firms exploit economies of scale and pursue strategies of product differentiation” (Markusen).

Explain the above statement with reference to the relevant models of international trade and their views on gains from trade.