The Constitution of Canada

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Monograph

Identifikator:: 1895543282

URN:: urn:nbn:de:zbw-retromon-242408

Document type:: Monograph

Author:: Munro, Joseph Edwin Crawford http://d-nb.info/gnd/1113111038

Title:: The Constitution of Canada

Place of publication:: Cambridge

Publisher:: Univ. Press

Year of publication:: 1889

Scope:: XXXVI, 356 Seiten

Digitisation:: 2022

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter V. The Provincial Assemblies

Collection:: Economics Books

INCREASING RETURNS 83 need of elaboration and modification on this score? Just as there are special conclusions for the industries in which cost increases as output enlarges, so we might expect other special conclusions for commodities in which cost declines with enlarged output. } Two things must here be noted : first, what exactly is meant by a law or tendency to increasing returns; and second, what is the effect of this sort of tendency in international trade. On the first topic some distinctions familiar in economic theory must be recalled. Any “law” of increasing returns means that all costs go down. The law is not at all the converse of that of diminishing returns in agriculture. In the latter, an increase of the output from a given plot or given area of land entails as a necessary corollary that, while the additional supplies are got at higher cost, the previous supplies continue to be got at cost unchanged. There- fore there are varying costs — some costs persistently higher than others. In the apparently opposite case of increasing returns, there are no persisting differences. True there is lower cost with enlargement of output; but it is the entire supply which is pro- duced at the lower cost. True, not all will be produced at lower cost immediately; but in the end it will. As has just been ex- plained, there will probably be a transition period of varying costs. An improvement which lessens costs is almost invariably intro- duced gradually, first in one establishment, then in another. For a while costs will be lower in the forward than in the lagging industry. The ultimate effect will be a decline all around. To come now to the main general conclusion which bears on the problems of international trade. Such a decline, when it has permeated the whole of an industry, may mean a change in its costs relatively to other industries. It may mean a new alignment of comparative costs, and accordingly may alter the conditions under which international trade is carried on. Such consequences, how- ever, are not of a novel kind, and call for no new analysis. With the irregular progress of the arts, the conditions of comparative advantage are subject to constant modification ; but these changes, while they lead to new conditions, involve merely the application of familiar reasoning to the changed situation.

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