Monopolistic competition ProQuestDocuments-2012-09-05.pdf

_______________________________________________________________ _______________________________________________________________ Report Information from ProQuest September 05 2012 00:59 _______________________________________________________________ 1 1 Monopolistic competition : Ruffin, Roy J. : Princeton: Princeton University Press, 2009. ProQuest : Most products in the world, even standard commodities such as oil and wheat, are naturally differentiated because nature is not uniform. But such generic differentiation is quite different from the economic heterogeneity that arises from a deliberate investment in a location, patent, plant, process, or personnel. This gives rise to monopolistic competition, because other firms can produce a similar or even identical variety at a different location with a high degree of substitution for the original variety. The basic idea of the model of monopolistic competition is simple: abstract completely from comparative advantage and make the simplest assumptions regarding preferences and costs. The role of monopolistic competition in international trade is to show how intraindustry trade can arise even in the absence of comparative advantage, and to demonstrate how the gains from trade result from both lower prices and more variety. The model also provides a framework for studying innovation and growth in the world economy. : CALIS e#24471;#25991;#29486;#33719;#21462;, UNICAT#32852;#21512;#30446;#24405;(#21002;#21517;) : Most products in the world, even standard commodities such as oU and wheat, are naturally differentiated because nature is not uniform. But such generic differentiation is quite different from the economic heterogeneity that arises from a deliberate investment in a location, patent, plant, process, or personnel. One must think of the firm as purchasing the differentiation with some sort of investment of fixed resources. This gives rise to monopolistic competition, because other firms can produc