Compensation increment. Dynamic comparative advantage and intra-industry trade

Author: Yin Desheng
Publisher:
Publish Date: 2006-10-01
Features: The new trade theory emerging in the 1980s, represented by Krugman, relaxes the assumptions of constant returns to scale and perfect competition in classical and neoclassical trade theories, incorporating increasing returns to scale and monopolistic competition into the trade theory framework. The new growth theory, also emerging in the 1980s, developed and evolved in an attempt to resolve the conflict between increasing returns to scale and competitive equilibrium within the neoclassical framework. Characterized by dynamic analysis, the new growth theory provides analytical tools and methods for establishing dynamic models for the new trade theory. How to integrate new growth theory with new trade theory to deepen the research on new trade theory is a pursuit of the trade theory community, and this book makes a valuable exploration in this regard. Specifically, the book primarily addresses three aspects: first, analyzing the impact mechanism of intra-industry trade on endogenous growth, extending endogenous growth theory to the field of international trade; second, analyzing the impact of intra-industry trade on income distribution; and third, explaining trade patterns and trade volume from the perspective of transaction efficiency, examining the determination of intra-industry trade and intra-firm trade patterns and volumes.
Around these three major issues, the author elaborates on the influence of increasing returns to scale on the formation and evolution of dynamic comparative advantage, as well as the evolutionary process of intra-industry trade patterns under dynamic comparative advantage. The analysis unfolds according to the causes of increasing returns to scale, summarizing the sources of dynamic comparative advantage from four aspects: external effects, human capital effects, innovation, and transaction efficiency.
The deepening of new trade theory research needs to extend in three aspects: first, analyzing the impact mechanism of intra-industry trade on endogenous economic growth, extending endogenous economic growth theory to the field of international trade; second, analyzing the impact of intra-industry trade on income distribution; and third, explaining trade patterns and trade volume from the perspective of transaction costs, examining the determination of intra-industry trade and intra-firm trade patterns and volumes.
This book integrates new trade theory with new growth theory around these three major issues, using dynamic analytical methods to elaborate on the influence of increasing returns to scale on the formation and evolution of dynamic comparative advantage, as well as the evolutionary process of intra-industry trade patterns under dynamic comparative advantage. The entire analysis unfolds according to the sources of increasing returns to scale, consisting of four steps.
Step 1 (Chapter 2): Explores the influence of external effects on the formation and evolution of dynamic comparative advantage, as well as the evolutionary process of intra-industry trade patterns based on external effects.
Step 2 (Chapter 3): Explores the influence of human capital effects on the formation and evolution of dynamic comparative advantage, as well as the evolutionary process of intra-industry trade patterns based on human capital effects.
Step 3 (Chapter 4): Explores the influence of innovation on the formation and evolution of dynamic comparative advantage, as well as the evolutionary process of intra-industry trade patterns based on innovation.
Step 4 (Chapter 5): Explores the influence of transaction costs on the formation and evolution of dynamic comparative advantage, as well as the evolutionary process of intra-industry trade and intra-firm trade patterns and trade scales based on transaction efficiency.