Economic of scale (2)

While the gains from trade are clearly a result of the cost reductions that come from specialization that exploit the economies of scale,there are a number of uncertainties in this model.first,there is no way to know which country will specialize in each good .Second,something unusual is needed to jolt production away from the autarky point ,but there is no way to predict the cause of the shock.in spite of these uncertainties ,the analysis opens up new possibilities for gains that do not exist in traditional models .Whether the introduction of increasing returns is more realistic than the constant-returns assumption is a debated question,but increasingly ,economists do think that scale economies can be important .