The new trade theory states that:

A). The locus of global production initially switches from the United States to other advanced nations.
B). World trade in certain products may be dominated by countries whose firms were first movers in their production.
C). Differences in technology may lead to differences in productivity, which in turn, drives international trade patterns.
D). Differences in labor productivity between nations underlie the notion of comparative advantage.
E). A rich country might actually be worse off by switching to a free trade regime with a poor nation.

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New trade theory suggests that a critical factor in determining international patterns of trade are the very substantial economies of scale and networ... View the full answer