chpt 7

free trade

when government does not restrict buying or selling from another country

import tariff

taxes imposed on things brought into a country

specific tariff

a fixed charge for each unit of imported good

ad valorem tariff

a proportion of the value of an imported good

export tariff

taxes on things taken and delivered outside the country

export ban

policy that partially or entirely restricts the export of a good

subsidies

financial payments from the government to domestic producers

import quotes

restriction on quantity of goods that can be brought into a country

tariff rate quota

low taxed is placed on things brought into country that meet the certain amount, anything over gets heavier taxes

voluntary export restraints

a government of an exporting country can limit exports due to a policy in the importing country

local content requirements

if u want to operate in a foreign location, your content can be subject to local content requirements (like in EU, netflix needs to have 30% local content)

dumping

selling goods in foreign market at price below cost of production or below “fair” market value

protecting jobs and industries

common political reason for government intervention, critics say unfair comp is overstated

protection national security

industries like defense need protection as a reason for gov political intervention

retaliating

gov can use intervention as threat to industries to open foreign markets

protecting consumers

from unsafe products, can be done through limiting or banning imports

futhering foreign policy objectives

g’s can grant preferential trade terms to countries it wants to build relationships with

protecting human rights

gov trade policy can be used to improve human rights policy of trading partner

infant industry

gov should help new industries until they strong enought to meet international competition

strategic trade policy

gov can help raise national income when domestic firm gains first-mover advantage

beggar thy neighbor policy

a country tries to fix itself economically at the expense of its trading partners

domestic policies

G’s don’t always act in the national interest, political interest groups may influence policy

manegerial implications

mangers need to consider how trade barries affect the strategy of a firm