is the author of the new trade theory
New trade theory
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 .
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 .