application∶internationaltrade(编辑修改稿)

application∶internationaltrade(编辑修改稿)内容摘要：

Because the quota raises the domestic price above the world price, domestic buyers of the good are worse off, and domestic sellers of the good are better off. License holders are better off because they make a profit from buying at the world price and selling at the higher domestic price. Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. The Effects of an Import Quota ... Price of Steel 0 Quantity of Steel Domestic supply Domestic demand World price Q1S Q2S Q2D Q1D Price without quota Price with quota Imports without quota Imports with quota Domestic supply + Import Supply Quota A B C E39。 E39。 39。 F G D Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. Changes in Welfare from an Import Quota A+B+C+D+E’+E”+F+G A+B+C+E’+E”+G The area D+F shows the fall in total surplus and represents the deadweight loss of the quota. Before Quota After Tariff Change Consumer Surplus Producer Surplus Government Revenue Total Surplus A+B+C+D+E’+E”+F A+B (C+D+E’+E”+F) G C+G +C None E’+E” +(E’+E”) (D+F) Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. The Effects of an Import Quota With a quota, total surplus in the market decreases by an amount referred to as a deadweight loss. The quota can potentially cause an even larger deadweight loss, if a mechanism such as lobbying is employed to allocate the import licenses. Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. The Effects of Tariffs and Quotas If government sells import licenses for full value, revenue equals that of equivalent tariff and the results of tariffs and quotas are identical. Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. Both tariffs and import quotas . . .  raise domestic prices.  reduce the welfare of domestic consumers.  increase the welfare of domestic producers.  cause deadweight losses. Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. Other Benefits of International Trade Increased variety of goods Lower costs through economies of scale Increased petition Enhanced flow of ideas Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. The Arguments for Restricting Trade Jobs National Security Infant Industry Unfair Competition Protection as a Bargaining Chip Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. Trade Agreements Unilateral: when a country removes its trade restrictions on its own. Multilateral: a country reduces its trade restrictions while other countries do the same. Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. NAFTA The North American Free Trade Agreement (NAFTA) is an example of a multilateral trade agreement. In 1993, NAFTA lowered the trade barriers among the ., Mexico, and Canada. Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. GATT The General Agreement on Tariffs and Trade (GATT) refers to a continuing series of negotiations among many of the world’s countries with a goal of promoting free trade. GATT has successfully reduced the average tariff among member countries from about 40% after WWII to about 5% today. Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. Summary The effects of free trade can be determined by paring the domestic price without trade to the world price. A low domestic price indicates that the country has a parative advantage in producing the good and that the country will bee an exporter. A high domestic price indicates that the rest of the world has a parative advantage in producing the good and that the country will bee an importer. Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. Summary When a country allows trade and bees an exporter of a good, producers of the good are better off, and consumers of the good are worse off. When a country allows trade and bees an importer of a good, consumers of the good are better off, and producers are worse off. Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. Summary A tariff – a tax on imports – moves a market closer to the equilibrium than would exist without trade, and therefore reduces the gains from trade. Import quotas will have effects similar to those of tariffs. Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. Summary There are various arguments for restricting trade: protecting jobs, defending national security, helping infant industries, preventing unfair petition, and responding to foreign trade restrictions. Economists, however, believe that free trade is usually the better policy. Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. Graphical Review Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. Equilibrium Without Trade... Price of Steel Equilibrium Price 0 Quantity of Steel Equilibrium quantity Domestic supply Domestic demand Producer surplus Consumer surplus International Trade in an Exporting Country... Price of Steel 0 Quantity of Steel Domestic demand Domestic supply World price Price after trade Exports Domestic quantity demanded Domestic quantity supplied Price before trade Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. How Free Trade Affects Welfare in an Exporting Country... Price of Steel 0 Quantity of Steel World price Domestic demand Domestic supply Price after trade Price before trade A B C。