Suppose that two countries, A and B, employ the same technology in the production of a good. External economies of scale apply in both countries

Analyze the effects of trade on long-run production levels if country A has a comparatively lower cost of production when trade begins.

Initially, country B will have a comparative advantage in production of the good. Over time, as production shifts to Country B, costs will decline there while increasing in country A. In the absence of market intervention, country B will have a monopoly. Note that no individual firm will have a monopoly unless internal economies of scale also apply.