Trade Theory And Policy at Hochschule Rhein-Waal | Flashcards & Summaries

Lernmaterialien für Trade Theory and Policy an der Hochschule Rhein-Waal

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TESTE DEIN WISSEN
What are the welfare effects of tariffs?
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TESTE DEIN WISSEN
Tariffs increase the price of the imported good and decrease the demand for the imported good. Large Country: Consumers lose Producers gain Tariff revenues for the government Terms of Trade gains due to fall in world price → overall effect: ambiguous Small Country: Consumers lose Producers gain Tariff revenues for the government No terms of Trade gains; world price remains unchanged → overall effect: welfare loss
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TESTE DEIN WISSEN
Who gains, who loses from protectionism?
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TESTE DEIN WISSEN
The domestic producers gain. The domestic consumers suffer.
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TESTE DEIN WISSEN
Arguments for protectionism?
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TESTE DEIN WISSEN
Protecting domestic industries from foreign competition Protecting the domestic economy from unfair trade practices of other countries (e.g. dumping) Promoting national growth and development
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TESTE DEIN WISSEN
What is a tariff?
Lösung anzeigen
TESTE DEIN WISSEN
A tariff is a tax that is levied when good is imported. A tariff raises the cost of importing goods from a foreign country. Tariffs have been used as a source of income for the government and to protect particular domestic sectors
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TESTE DEIN WISSEN
What are some non-tariff trade barriers?
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TESTE DEIN WISSEN
Import Quotas Voluntary export restraints Administrative barriers
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TESTE DEIN WISSEN
What can economies of scale explain?
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TESTE DEIN WISSEN
That trade can be beneficial, even if no comparative advantage exists
Lösung ausblenden
TESTE DEIN WISSEN
What is the Optimal Tariff, what are its limitations?
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TESTE DEIN WISSEN
A large country is able to affect the prices of the import good not only on the domestic market, but also on the foreign market. So theoretically it is possible to determine a tariff rate at which the gains from the t.o.t effect offsett the losses of consumption and production But very difficult to determine this rate. Only large countries could do this, as small countries do not affect world price. And this practice might be subject to retaliation of the affected countries (beggar-thy-neighbour policy)
Lösung ausblenden
TESTE DEIN WISSEN
What are the core principles of the multilateral trading system?
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TESTE DEIN WISSEN
1 No discrimination (most favored nation principle + national treatment) 2. Gradual trade liberalization 3. Reciprocity 4. Predictability 5. Promoting fair competition
Lösung ausblenden
TESTE DEIN WISSEN
Please explain the relevance of mutual trade liberalizations by using arguments from Public Choice Theory.
Lösung anzeigen
TESTE DEIN WISSEN
Avoiding bias in favor of protectionism by turning the indirect interest of export industries in domestic trade policy into a direct interest -> mutual concession -> better access to foreign markets limits the freedom of politicians and bureaucrats to respond to protecionist request
Lösung ausblenden
TESTE DEIN WISSEN
What are economies of scale and what do they explain?
Lösung anzeigen
TESTE DEIN WISSEN
Production is more efficient the larger the scale at which it takes place, i.e. the cost per unit of output falls as a firm / industry increases output They provide and incentive for int. trade They can explain, why similar countries do trade with each other
Lösung ausblenden
TESTE DEIN WISSEN
What are external economies of scale? What are the reasosns for its efficiency?
Lösung anzeigen
TESTE DEIN WISSEN
They occur when the cost per unit decreas with an increasing size of the industry, but not necessarily on the sie of a single firm) If the industry is geographically concentrated ("cluster) this might be more efficient due to specialized suppliers labor market pooling knowledge spillovers (=> so the cost for all the firms sink as the suppliers only have to supply to one region instead of world wirde, as an example)
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TESTE DEIN WISSEN
What are internal economies of scale?
Lösung anzeigen
TESTE DEIN WISSEN
A firm's average cost of production decreases the more output it produces. i.e. due to fix cost degression, bulk buying of materials, efficiency gains
Lösung ausblenden
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Q:
What are the welfare effects of tariffs?
A:
Tariffs increase the price of the imported good and decrease the demand for the imported good. Large Country: Consumers lose Producers gain Tariff revenues for the government Terms of Trade gains due to fall in world price → overall effect: ambiguous Small Country: Consumers lose Producers gain Tariff revenues for the government No terms of Trade gains; world price remains unchanged → overall effect: welfare loss
Q:
Who gains, who loses from protectionism?
A:
The domestic producers gain. The domestic consumers suffer.
Q:
Arguments for protectionism?
A:
Protecting domestic industries from foreign competition Protecting the domestic economy from unfair trade practices of other countries (e.g. dumping) Promoting national growth and development
Q:
What is a tariff?
A:
A tariff is a tax that is levied when good is imported. A tariff raises the cost of importing goods from a foreign country. Tariffs have been used as a source of income for the government and to protect particular domestic sectors
Q:
What are some non-tariff trade barriers?
A:
Import Quotas Voluntary export restraints Administrative barriers
Mehr Karteikarten anzeigen
Q:
What can economies of scale explain?
A:
That trade can be beneficial, even if no comparative advantage exists
Q:
What is the Optimal Tariff, what are its limitations?
A:
A large country is able to affect the prices of the import good not only on the domestic market, but also on the foreign market. So theoretically it is possible to determine a tariff rate at which the gains from the t.o.t effect offsett the losses of consumption and production But very difficult to determine this rate. Only large countries could do this, as small countries do not affect world price. And this practice might be subject to retaliation of the affected countries (beggar-thy-neighbour policy)
Q:
What are the core principles of the multilateral trading system?
A:
1 No discrimination (most favored nation principle + national treatment) 2. Gradual trade liberalization 3. Reciprocity 4. Predictability 5. Promoting fair competition
Q:
Please explain the relevance of mutual trade liberalizations by using arguments from Public Choice Theory.
A:
Avoiding bias in favor of protectionism by turning the indirect interest of export industries in domestic trade policy into a direct interest -> mutual concession -> better access to foreign markets limits the freedom of politicians and bureaucrats to respond to protecionist request
Q:
What are economies of scale and what do they explain?
A:
Production is more efficient the larger the scale at which it takes place, i.e. the cost per unit of output falls as a firm / industry increases output They provide and incentive for int. trade They can explain, why similar countries do trade with each other
Q:
What are external economies of scale? What are the reasosns for its efficiency?
A:
They occur when the cost per unit decreas with an increasing size of the industry, but not necessarily on the sie of a single firm) If the industry is geographically concentrated ("cluster) this might be more efficient due to specialized suppliers labor market pooling knowledge spillovers (=> so the cost for all the firms sink as the suppliers only have to supply to one region instead of world wirde, as an example)
Q:
What are internal economies of scale?
A:
A firm's average cost of production decreases the more output it produces. i.e. due to fix cost degression, bulk buying of materials, efficiency gains
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