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Paul Krugman took issue with the comparative advantage explanation for international trade. While he acknowledged that it makes sense for countries to trade what they
Paul Krugman took issue with the comparative advantage explanation for international trade. While he acknowledged that it makes sense for countries to trade what they are good at, he felt this theory was incomplete. He theorized that countries produce certain goods at lower costs by creating economies of scale, and it's this "first mover" advantage that explains trade patterns more accurately that the Ricardian model. He won the Nobel prize for his New Trade Theory
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