Packet 2: Bonus 7

Pol Antràs and Elhanan Helpman’s model of global sourcing helped promote this theory. For 10 points each:
[10h] Name this theory, which predicts that intra-industry monopolistic competition will raise aggregate productivity by causing low-productivity firms to leave the export market, as in Marc Melitz’s model of reallocation.
ANSWER: new new trade theory [or NNTT; prompt on new trade theory or NTT]
[10e] New new trade theory builds on new trade theory, early adopters of which included this liberal economist and former New York Times columnist.
ANSWER: Paul Krugman
[10m] New trade theory emphasizes economies of scale related to this effect, whose negative form is a congestion externality. In this effect, the value of a good or service increases as it is more widely adopted.
ANSWER: network effects [or network externalities; accept demand-side economies of scale; reject “economies of scale” or “returns to scale”]
<Editors, Social Science> | K. Playoffs 2 (Editors 2)

HeardPPBE %M %H %
2413.3396%38%0%

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