types of trade protection

studied byStudied by 5 people
0.0(0)
Get a hint
Hint

trade protection

1 / 25

flashcard set

Earn XP

Description and Tags

26 Terms

1

trade protection

government intervention aiming to limit imports and/or encourage exports by setting up trade barriers that protect from foreign competition

New cards
2

tariff

a tax that is placed on imports to protect domestic industries from foreign competition and to raise revenue for the government

New cards
3

quota

an import barrier that set limits on the quantity or value of imports that may be imported into a country

New cards
4

production subsidy (international)

an amount of money paid by the government to a firm, per unit of output, to encourage production and provide the firm an advantage over foreign competition

New cards
5

export subsidy

payments made by the government to exporting firms on the basis of the number of units exported

New cards
6

administrative barriers

trade barriers in the form of regulations that aim to limit imports into a country. these barriers may take the form of product safety standards, sanitary standards or pollution standards

New cards
7

why countries might not want to engage in free trade

  • protect infant industries

  • national security

  • environmental standards

  • anti-dumping

  • unfair competition

  • government revenue

  • domestic job protection

  • ELDC diversification

New cards
8

winners from tariffs

  • domestic producers are better off

  • domestic employment in protected industry increases

  • government gains tariff revenues

New cards
9

losers from tariffs

  • domestic consumers are worse off

  • domestic income distribution worsens (regressive tax)

  • increased inefficiency in production

  • foreign producers are worse off

  • global misallocation of resources

New cards
10

calculations: consumer expenditure from tariffs

consumer expenditure = P x Q

consumer expenditure before tariff = Pw x Q2

consumer expenditure after tariff = (Pw + T) x Q4

<p>consumer expenditure = P x Q </p><p>consumer expenditure before tariff = Pw x Q2 </p><p>consumer expenditure after tariff = (Pw + T) x Q4</p>
New cards
11

calculations: consumer surplus from tariffs

consumer surplus before tariff = (max price consumers pay - Pw) x Q2 / 2

consumer surplus after tariff = (max price consumers pay - (Pw - T)) x Q4 / 2

New cards
12

calculations: domestic producer revenue from tariff

domestic producer revenue = P x Q

domestic producer revenue before tariff = Pw x Q1

domestic producer revenue after tariff = (Pw + T) x Q3

New cards
13

calculations: producer surplus from tariff

producer surplus before tariff = (Pw - min price to sell) x Q1 / 2

producer surplus after tariff = ((Pw + T) - min price to sell) x Q3 / 2

<p>producer surplus before tariff = (Pw - min price to sell) x Q1 / 2</p><p>producer surplus after tariff = ((Pw + T) - min price to sell) x Q3 / 2</p>
New cards
14

calculations: foreign producer revenue from tariff

foreign producer rev = Pw x import quantity

foreign producer rev before tariff = Pw x (Q2 - Q1)

foreign producer rec after tariff = Pw x (Q4 - Q3)

<p>foreign producer rev = Pw x import quantity </p><p>foreign producer rev before tariff = Pw x (Q2 - Q1)</p><p>foreign producer rec after tariff = Pw x (Q4 - Q3)</p>
New cards
15

calculations: govā€™t revenue from tariff

govā€™t rev = tariff x import quantity

govā€™t revenue = T x (Q4 - Q3)

<p>govā€™t rev = tariff x import quantity </p><p>govā€™t revenue = T x (Q4 - Q3)</p>
New cards
16

anti-dumping

tariffs that aim at raising the artificially low price of a dumped imported good to the level of the higher domestic price

  • dumped good: one that is exported at a price below cost of production

New cards
17

winners from quota

  • domestic producers are better off

  • domestic employment in protected industry increases

New cards
18

neutral impact from quota

  • the govā€™t = no gain or loss

New cards
19

losers from quota

  • domestic consumers worse off

  • domestic income distribution worsens (regressive)

  • increased in efficiency in production

  • foreign producers are both worse and better off

  • global misallocation of resources

New cards
20

quota diagram

knowt flashcard image
New cards
21

winners from production subsidies

  • domestic producers are better off

  • domestic employment in protected industry increases

  • consumers are not affected

New cards
22

losers from production subsidies

  • govā€™t budget loses

  • taxpayers are worse off

  • increased inefficiency in production

  • exporting countries are worse off

  • global misallocation of resources

New cards
23

export subsidy diagram

knowt flashcard image
New cards
24

winners from export subsidies

  • producers better off

  • domestic employment increases

New cards
25

losers from export subsidies

  • consumers are worse off

  • govā€™t budget loses

  • taxpayers worse off

  • domestic income distribution worsens

  • exporting countries worse off

  • global misallocation of resources

New cards
26

production subsidy diagram

knowt flashcard image
New cards

Explore top notes

note Note
studied byStudied by 22 people
Updated ... ago
4.0 Stars(1)
note Note
studied byStudied by 9 people
Updated ... ago
5.0 Stars(1)
note Note
studied byStudied by 72 people
Updated ... ago
5.0 Stars(3)
note Note
studied byStudied by 62 people
Updated ... ago
4.0 Stars(1)
note Note
studied byStudied by 3 people
Updated ... ago
5.0 Stars(1)
note Note
studied byStudied by 508 people
Updated ... ago
5.0 Stars(6)
note Note
studied byStudied by 69 people
Updated ... ago
5.0 Stars(1)
note Note
studied byStudied by 14064 people
Updated ... ago
4.0 Stars(2)

Explore top flashcards

flashcards Flashcard65 terms
studied byStudied by 15 people
Updated ... ago
5.0 Stars(1)
flashcards Flashcard57 terms
studied byStudied by 9 people
Updated ... ago
5.0 Stars(2)
flashcards Flashcard168 terms
studied byStudied by 55 people
Updated ... ago
5.0 Stars(1)
flashcards Flashcard96 terms
studied byStudied by 4 people
Updated ... ago
5.0 Stars(1)
flashcards Flashcard20 terms
studied byStudied by 123 people
Updated ... ago
5.0 Stars(3)
flashcards Flashcard30 terms
studied byStudied by 15 people
Updated ... ago
5.0 Stars(1)
flashcards Flashcard100 terms
studied byStudied by 21 people
Updated ... ago
5.0 Stars(1)
flashcards Flashcard30 terms
studied byStudied by 4 people
Updated ... ago
5.0 Stars(1)