Increasing-Returns Industry

Increasing-Returns Industry and International Trade Economy

In relation to international trade economy, Christopher Mark (1993) provided the following definition of Increasing-Returns Industry: An industry requiring an exceptionally large or expensive physical plant, so that economies of scale (also known as increasing returns to scale) still exist at output levels saturating the firm's domestic market. Examples often cited are steel, aircraft, and many defense industries. Such industries –which may also be referred to as pern1anent excess-capacity industries, or natural monopolies –pose particular problems for international trade policy (see discussion underexcess capacity).