Question

In a model of dynamic increasing returns, illustrate a and briefly explain using words. In this scenario, France protects its cotton industry with a temporary blockade, but after the blockade ends the protection is not enough for France to retain an advantage in cotton production, and once UK cotton is no longer blockaded, that the UK will recover its initial advantage. Be sure to draw and label any necessary learning curves (UK and France), and any relevant points on the curves.

Answer 1

Dynamic increasing returns to scale suggests that typical costs fall as cumulative output gradually rises (dynamic economies of scale and increasing returns to scale average expenses fall as current output increases).

A two-final-good and knowledge-based growth design is constructed to study growth patterns in a small open economy. The source of development is the introduction of new intermediate products as a result of R&D, which in turn produces dynamic increasing returns in both the production of one last excellent and R&D. The outcomes have gotten in the design follow intercountry differences in growth patterns. Depending on the innovation level, zero-growth stability may appear. There exist some short-lived policies that can help the economy take off. If the economy grows, the growth rate boosts. Moreover, the share of the manpower used by the constant-returns final-good sector decreases in the process of growth. The patterns of development diffusion are well approximated by the logistic curves. This is the robust empirical fact validated by many research studies in innovations dynamics. Here, we show that the logistic pattern of development diffusion can be duplicated by the time-dependent stochastic process with favorable feedbacks along the diffusion trajectory. The dynamic increasing returns process is modeled by Polya Urns. Up until now, Urn designs have been mainly utilized to study the [ path-dependent] limitation homes. On the contrary, this work focuses on the short-term [limited time] homes studying the conditions under which urn designs catch the logistic trajectories which often track the empirical diffusion process. As examples, we adjust the process to match a number of cases of diffusion of motor ships in European nations.

Economies of Scale When you take a look at the long-run average cost curve, you see that it does not continue to fall indefinitely. Eventually, it levels off and then starts to rise. When the business ends up being so large, the expense per unit of producing the product increases. This phenomenon is known as "diseconomies of scale". There are a number of factors that diseconomies of scale might exist. If we are referring to a business that produces an item, as the factory becomes larger, the business might have to ship its production over a longer range. Transportation expenses may rise.