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What are the channels of the gains from trade in the presence of scale economies (increasing...

What are the channels of the gains from trade in the presence of scale economies (increasing returns to scale)? Explain these channels with graphical illustration.

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Y Increasing of Economia Returns scale Cost Output C, 1 C2 Q, Qq output inputsThe gains from international trade can acheive from the presence of scale economies (increasing returns to scale). Economics of scale arises from higher production with costs. Increase returns to scale always brings greater gains and benefits from trade.Increasing returns of scales implies greater specialization and division of labor.The channels of trade provides better support along with clear market informations.This can increases in cost reduction and enhance profitability.

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