The main content of the new new trade theory

The main contents about the new new trade theory are shared as follows:

The new new trade theory refers to the theory that there is about Heterogeneity of new trade theory and Endogenous boundary model of firms.

The new trade theory is the theory of Heterogeneity of new trade theory and Endogenous boundary model.

These two theories will be the scope of international trade research from the traditional trade theory of inter-industry trade into the study of the same industry within the differences in the choice of enterprises in international trade. The new new trade theory is more from the enterprise level to explain the phenomenon of international trade and international investment.

Major differences:

From the scope of the study, the traditional trade theory is mainly to study inter-industry trade, the new trade theory is mainly to study intra-industry trade under the conditions of increasing scale and imperfect competition, while the new new trade theory explains the phenomenon of international trade and investment from the level of heterogeneity of enterprises.

The new new international trade theory is more to explain the internationalization path choice of multinational corporations, whether they choose to export or outward foreign direct investment for global expansion strategy.

The new new international trade theory analyzes the relationship between the heterogeneity of enterprises and the decision of export and FDI from a more micro level - the perspective of enterprises, and pays attention to the problem of choosing the way of nationalization path of enterprises.

There are two main models in the new new international trade theory, one is the heterogeneous enterprise trade model proposed by scholars represented by Melitz, and the other is the endogenous border model of enterprises proposed by scholars represented by Antras. The former describes the choices of different firms in the same industry on the question of whether or not to export. The latter illustrates the choice of a firm in the way it allocates resources.

The development of any industry is to some extent historically contingent, and under the preconditions of imperfect competition and trade in similar products, the demand for and return on factors of production depend on changes in the technological conditions of production.

Changes in the technology of production can alter the structure of demand and return profile of factors of production and affect trade under similar factor conditions, ultimately leading to trade in like products.