Documente Academic
Documente Profesional
Documente Cultură
of home industries from foreign competition by the imposition of trade barriers on foreign products by the govt.
Effects of Tariff:
1. Consumers reduce consumption of imports a) Switching to domestically produced import substitutes b) Consumer surplus decreases Domestic producers expand production a) Revenues previously earned by foreign producers now go to domestic producers b) Producers surplus increases Gains in govt. revenue a) Tariffs = tax revenue b) Overall Deadweight Loss METHODS OF TRADE RESTRICTION
MAY LEAD TO: Misallocation of resources Retaliation -> Reduction in world trade, employment and income -> Worldwide Depression Increase in price and Cost Of Living Smaller variety of goods available in the domestic market Problem of monopoly profits Aid Replacement
POINTS AGAINST
POINTS SUPPORTING
2.
Anti-Trade Policies
3.
(Protectionism)
Preferential Treatment Product Standard Regulation Procurement policies Tariffs - a tax on imports; government gain Import Quotas - a limit to how many imports allowed; gain to produces as higher profits Import Licensing - governments grants importers the license to import goods. Foreign Exchange Control - limits on dealing of foreign currency, less imports possible Embargo - Total ban on foreign imports Export Subsidies - distort market forces as supply will be greater , more volume of exports Voluntary Export Restraint where 2 countries make an agreement to limit the volume of their exports to one another over an agreed period of time
Non-Economic Reasons: Protect Key industries Foster closer political ties Promote social policies Pursue Political objectives