2/21/2012

Economy of scales


 International transport costs for goods are far lower than the local transport costs for goods. Is it about the average pollution and marginal pollution? For example, if America imports laptop from China, the amount cannot be one, which is meaningless. So the amount must be large. And the laptops are transported by ships. Thus the pollution that each of the laptop cause is the total amount of the pollution divide the amount of laptops. Now suppose you hate international transportation and wanna buy a laptop in NYC. You drive there, buy one laptop, and drive back. The pollution caused is far higher.

I am reading Harford's comment on international trade and he talks about the government subsidy (Intensive cultivation stuff) So I get enlightenment that maybe subsidy, another way of domestic protection of one field, can break the comparative advantage of other countries and make other country worse off.

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