Introduction Countries engage in international trade for two basic reasons Countries trade because they differ either in their resources or in technology. Countries trade in order to achieve scale economies or Increasing returns in production a Two models of international trade in which economies of scale and imperfect competition play a crucial role Monopolistic competition model ° Dumping model Copyright C 2003 Pearson Education, Inc Slide 6-3Copyright © 2003 Pearson Education, Inc. Slide 6-3 Introduction ▪ Countries engage in international trade for two basic reasons: • Countries trade because they differ either in their resources or in technology. • Countries trade in order to achieve scale economies or increasing returns in production. ▪ Two models of international trade in which economies of scale and imperfect competition play a crucial role: • Monopolistic competition model • Dumping model