Advanced International Trade Theory and Policy
Advanced International Trade Theory and Policy ECON 433
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This 0 page Class Notes was uploaded by Miss Romaine Grimes on Sunday November 1, 2015. The Class Notes belongs to ECON 433 at Pennsylvania State University taught by Staff in Fall. Since its upload, it has received 21 views. For similar materials see /class/233104/econ-433-pennsylvania-state-university in Economcs at Pennsylvania State University.
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Date Created: 11/01/15
Advanced International Trade Lecture 16 Prof Tybout October 24 2006 Outline Trade policy overview Tariffs in general equilibrium Evidence on the effects oftariff reductions in the Uruguay Round Export taxes versus import tariffs Tariffs in partial equilibrium Relevant reading Caves Frankel and Jones chap 10 Trade Policy Overview Why inhibit trade Employment income distribution objectives Desire to promote certain sectors Infant industry arguments learning by doing External returns to scale National security Exert monopoly power Large country with competitive producers Large domestic oligopolist Strategic deterrent to protection abroad Generate revenue for the government Correct a shortrun balance of payments problem Types of Protection Tariffs Speci c and Ad valorem Quotas and Voluntary Export Restraints Other Nontariff barriers Antidumping laws Exchange controls Domestic content requirements Subsidies Public procurement policies Customs valuation procedures Technical product regulations health safety packaging Ad Valorem Duties simple averages India China Mexico Japan Canada US MFN tariffs 2002 2002 2003 2002 2002 2002 All goods 290 124 180 32 41 39 Agricultural goods AOA 369 192 245 73 31 51 Nonagricultural goods 277 113 171 27 42 37 Source World Trade Organization Effects of tariffs on prices Consumers now pay 1tPxW for imports ofX goods and for domestically produced Xgoods DomesticXproducers therefore receive Px 10wa per unit and the domestic price ratio is gwnww y Py But domestic consumers and producers still must exchange onrXat the world price ratio General equilibrium effects of a tariff on X imports Slope 1tpW Effects of the tariff In the tariffdistorted equilibrium Producers equate the MRT to tariffdistorted prices Consumers equate their MRS to tariffdistorted prices Factor markets clear Consumers spend all of their income Are there net losses or net gains for the economy Who are the winners and losers if all factors are mobile Ifsome factors are sectorspeci c