The model applies to labor-saving and capital-using products that (at least at first) cater to high-income groups.
In the new product stage, the product is produced and consumed in the US; no export trade occurs. In the maturing product stage, mass-production techniques are developed and foreign demand (in developed countries) expands; the US now exports the product to other developed countries. In the standardized product stage, production moves to developing countries, which then export the product to developed countries.
The model demonstrates dynamic comparative advantage. The country that has the comparative advantage in the production of the product changes from the innovating (developed) country to the developing countries.
Contents[hide] * 1 Product life-cycle * 1.1 Stage 1: Introduction * 1.2 Stage 2: Growth * 1.3 Stage 3: Maturity * 1.4 Stage 4: Decline * 2 References |
 Product life-cycle
There are four stages in a product's life cycle:
The location of production depends on the stage of the cycle.
 Stage 1: Introduction
New products are introduced to meet local (i.e., national) needs, and new products are first exported to similar countries,... [continues]
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