文本国际贸易new ch14the impact of trade policy

1、The Impact of Trade PoliciesCopyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinChapter 14Learning ObjectivesIllustrate how tariffs, quotas, and subsidies affect domestic markets.Identify the winners, losers, and net country welfare effects of protection.Explain ho

2、w the effects of protection differ between large and small countries.Demonstrate how protection in one market can affect other markets in the economy.14.2 Trade Restrictions in a Partial Equilibrium Setting: The Small-Country Case-14.2.1 The Impact of an Import Tariff-14.2.2 The Impact of an Import

3、Quota and a Subsidy to peting Production-14.2.3 The Impact of Export Policies14.2 Trade Restrictions in Partial Equilibrium: The Small Country CaseWhat happens when a country imposes a tariff? Its domestic price rises.Therefore, tariffs: benefit domestic producersharm domestic consumersgenerate tari

4、ff revenue for the government-14.2.1 The Impact of an Import TariffConsumer surplusProducer surplusConsumer SurplusConsumer surplus (CS) is a measure of the overall well-being of consumers.CS is the area between the demand curve and the price.CS varies inversely with the price.Consumer SurplusDQPP*P

5、roducer SurplusProducer surplus (PS) is a measure of the well-being of producers.PS is the area between the supply curve and the price.PS varies directly with price.Producer SurplusSQP P*Tariffs: Small Country CaseDQPS$1$1.351000200012501750cdbaCS falls by area a+b+c+d, or $656.25.PS rises by area a

6、, or $393.75.Revenue rises by area c, or $175.Deadweight loss is areas b+d, or $87.50.14-10Tariffs: Small Country CaseA tariff makes producers better off, but overall, the small countrys welfare falls.14.2.2 Import Quotas and subsidy to import competing production1) Import Quotas: Small Country Case

7、Recall that quotas and tariffs can be designed to be equivalent.The difference is that with quotas there is no revenue collected.Instead rent will be captured byholders of import licenses or the government if it auctions the licenses, orforeign suppliers, if they organize.The welfare implications of

8、 the quota are otherwise the same as for tariffs.02) Production Subsidies: Small Country CaseDQPS$5$6100190120160cbaA $1 subsidy has the effect of shifting the supply curve to the right.CS doesnt change, because consumers still pay $5.PS rises by areas a+bThe cost of the subsidy is a+b+cDeadweight l

9、oss is areas c.S14-14Production Subsidies: Small Country CaseProduction subsidies lead to deadweight loss because of the expansion of relatively inefficient production.However, the DWL is less than would have occurred if an equivalent tariff or quota were used.0-14.2.3 The Impact of Export Policies1

10、) Export Taxes2) Export Subsidies3) Voluntary Export Restraints1) Export Taxes: Small Country CaseExport taxes cause the price in the imposing (i.e., exporting) country to fall, since some of what had been exported is not anymore.Wed predict an increase in CS, a decrease in PS, and a gain in revenue

11、.0Export Taxes: Small Country CasePQSDPFTPETCS rises by area a.PS falls by areas a+b+c+d.Revenue rises by area c.DWL is b+d.0adcbExport Taxes: Small Country CaseAn export tax tariff makes consumers better off, but overall, the small countrys welfare falls.2) Export Subsidies: Small Country CaseExpor

12、t subsidies cause the price in the imposing (i.e., exporting) country to rise, since more of what is produced is now exported.Wed predict an decrease in CS, an increase in PS.The subsidy will generate cost, not revenue.0Export Subsidies: Small Country CasePQSDPESPFTCS falls by area a+bPS rises by ar

13、eas a+b+c+d+eSubsidy cost is b+c+d+e+fOverall effect is a loss: b+f0adcbefExport Subsidies: Small Country CaseAn export subsidy tariff makes producers better off, but overall, the small countrys welfare falls.3) Voluntary Export Restraints: Small Country CaseSimilar to tariffs or quotas, VERs raise

14、the domestic price whichlowers CSraises PSRent, however, is captured by the exporting country.The imposing country will lose not only the DWL triangles, but also the rent rectangle; welfare falls.0Tariffs: Large Country CaseIn the previous analysis, the tariff caused the imposing countrys price to r

15、ise by the full amount of the tariff.This would mean that the imposing country is “small”; if it imposes a tariff, it is unable to affect the world price.What if a country is not “small”?014.3 Trade Restrictions in a Partial Equilibrium Setting: The Large-Country Case-14.3.1 Framework for Analysis-1

16、4.3.2 The Impact of an Import TariffTariffs: Large Country CasePQPQSDSDImporting CountryExporting CountryPFT0abdceThe tariff causes price to rise in the importing country; P falls in the exporting country.14-26Tariffs: Large Country CasePQPQSDSDImporting CountryExporting CountryPFT0abdceImporting co

17、untry CS falls by a+b+c+dPS rises by area a.Revenue increases by areas c+eOverall effect: e(b+d)14-27Tariffs: Large Country CaseA large country could increase its welfare by imposing a tariff if the revenue extracted from the exporting country (area e) is bigger than the deadweight loss (areas b+d).

18、This assumes that the exporting country does not retaliate.014.4 Trade Restrictions in General EquilibriumWe can use general equilibrium analysis to better understand the economy-wide effects of protection.A tariff on imports of good Y will stimulate domestic production.The economy winds up on a low

19、er indifference curve.14.4.1 Tariffs in General Equilibrium: Small Country CaseYXB0C0B1(Px/Py)0C1Px/Py(1+t)In free trade, producer equilibrium is at B0, and consumer equilibrium is at C0. The tariff changes production to point B1;consumption moves to C1 (on a lower indifference curve).14-3014.4.2 Trade Restrictions in General Equilibrium: The Large Country CaseTo understand the effects of protectionism in the l