External Economies

  • Takashi Negishi
Part of the Research Monographs in Japan-U.S. Business & Economics book series (JUSB, volume 6)


As we saw in Chapter 3, already in 1776 Adam Smith pointed out the importance of increasing returns to scale for international trade in his Wealth of Nations. It is rather recent, however, that the role of increasing returns has begun to be discussed seriously in the modern theory of international trade. Since the assumption of perfect competition, which has been widely made, is not consistent with the so-called internal economies, Marshallian external economies have been considered by e.g., Mathews [1949], Melvin [1969] and Kemp and Negishi [1970].1 While these early Marshallian approaches forcus on on the relation of commodity prices and commodity trade, Ethier [1979] suggests a drastically different one which forcuses on prices of factors of production (see Krugman [1987]).


International Trade Foreign Exchange Demand Curve Foreign Exchange Market Domestic Currency 
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Copyright information

© Springer Science+Business Media New York 2001

Authors and Affiliations

  • Takashi Negishi
    • 1
  1. 1.Aoyama Gakuin UniversityJapan

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