According to New Trade Theory, a country may export a good even without comparative advantage due to:

CA Foundation · Business Economics · MTP · January 2026
According to New Trade Theory, a country may export a good even without comparative advantage due to:
(A) A. Government trade restrictions
(B) B. Increasing returns to scale and network effects
(C) C. Factor abundance reversal
(D) D. Perfect competition in global markets

Suggested Answer and Working Notes:

Correct Answer: Option (B)

B. Increasing returns to scale and network effects

Topics: International Trade

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