Economics · International Trade Theory
The 'New Trade Theory' developed by Paul Krugman differs from the traditional Heckscher-Ohlin theory by emphasizing:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Perfect competition and constant returns to scale
- 2Labor productivity differences between countries
- 3Increasing returns to scale and monopolistic competition✓
- 4Factor endowments as the sole determinant of trade
Correct answer
Increasing returns to scale and monopolistic competition
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