History of The Theory's Development
The theory was initially associated with Paul Krugman in the late 1970s; Krugman claims that he heard about monopolistic competition from Robert Solow. Looking back in 1996 Krugman wrote that International economics a generation earlier had completely ignored returns to scale. "The idea that trade might reflect an overlay of increasing-returns specialization on comparative advantage was not there at all: instead, the ruling idea was that increasing returns would simply alter the pattern of comparative advantage." In 1976, however, MIT-trained economist Victor Norman had worked out the central elements of what came to be known as the Helpman-Krugman theory. He wrote it up and showed it to Avinash Dixit. However, they both agreed the results were not very significant. Indeed Norman never had the paper typed up, much less published. Norman's formal stake in the race comes from the final chapters of the famous Dixit-Norman book.
James Brander, a PhD student at Stanford at the time, was undertaking similarly innovative work using models from industrial organisation theory—cross-hauling—to explain two-way trade in similar products.
Read more about this topic: New Trade Theory
Famous quotes containing the words history of the, history of, history, theory and/or development:
“The history of the past is but one long struggle upward to equality.”
—Elizabeth Cady Stanton (1815–1902)
“There are two great unknown forces to-day, electricity and woman, but men can reckon much better on electricity than they can on woman.”
—Josephine K. Henry, U.S. suffragist. As quoted in History of Woman Suffrage, vol. 4, ch. 15, by Susan B. Anthony and Ida Husted Harper (1902)
“To care for the quarrels of the past, to identify oneself passionately with a cause that became, politically speaking, a losing cause with the birth of the modern world, is to experience a kind of straining against reality, a rebellious nonconformity that, again, is rare in America, where children are instructed in the virtues of the system they live under, as though history had achieved a happy ending in American civics.”
—Mary McCarthy (1912–1989)
“The theory seems to be that so long as a man is a failure he is one of God’s chillun, but that as soon as he has any luck he owes it to the Devil.”
—H.L. (Henry Lewis)
“Somehow we have been taught to believe that the experiences of girls and women are not important in the study and understanding of human behavior. If we know men, then we know all of humankind. These prevalent cultural attitudes totally deny the uniqueness of the female experience, limiting the development of girls and women and depriving a needy world of the gifts, talents, and resources our daughters have to offer.”
—Jeanne Elium (20th century)