Competition and Trade with Increasing Returns in Less Developing Countries

Dr. Hernan Ocampo Solarte

Florida International University , USA

This paper follows Krugman's classical study about trade and monopolistic competitive markets and increasing returns and examines what effects take place on less developed countries characterized by infinite supplies of labor à la Lewis in labor growth, consumption per capita, choice variety and industrial growth among others. Some results are different as expected and corroborates that trade between less developed economies is an important path to follow in increasing economic growth.