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Explain the modern theory of international trade?



Explain the modern theory of international trade?..

Answer / Charitra Mishra

The modern theory of international trade emphasizes the role of product differentiation, economies of scale, and imperfect competition in shaping international trade patterns. Unlike the classical theory which focuses on comparative advantage and absolute advantage, the modern theory acknowledges that firms can gain competitive advantage through unique product offerings, proprietary technology, or brand reputation.

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