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International Trade - Theory and Policy

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International Trade - Theory and Policy

This text is built on the belief that to understand the international economy, students need to learn how economic models are applied to real world problems. It is true what they say, that ”economists do it with models.“ That's because economic models provide insights about the world that are simply not obtainable solely by discussion of the issues. A variety of international trade models including the Ricardian, Heckscher-Ohlin, and the monopolistic competition models are presented.

EconomicsSocial Sciences
Author
Anonymous
Publisher
LibreTexts
Source
LibreTexts
License
CC BY-NC-SA
Language
EN
Category
Economics
Read online Download PDF (open licence)
Contents· 127 sections
  1. 01: Introductory Trade Issues- History Institutions and Legal Framework
  2. 1.1: The International Economy and International Economics
  3. 1.2: Understanding Tariffs
  4. 1.3: Recent Trade Controversies
  5. 1.4: The Great Depression Smoot-Hawley and the Reciprocal Trade Agreements Act (RTAA)
  6. 1.5: The General Agreement on Tariffs and Trade (GATT)
  7. 1.6: The Uruguay Round
  8. 1.7: The World Trade Organization
  9. 1.8: Appendix A- Selected U.S. Tariffs - 2009
  10. 1.9: Appendix B- Bound versus Applied Tariffs
  11. 02: The Ricardian Theory of Comparative Advantage
  12. 2.01: The Reasons for Trade
  13. 2.02: The Theory of Comparative Advantage- Overview
  14. 2.03: Ricardian Model Assumptions
  15. 2.04: The Ricardian Model Production Possibility Frontier
  16. 2.05: Definitions- Absolute and Comparative Advantage
  17. 2.06: A Ricardian Numerical Example
  18. 2.07: Relationship between Prices and Wages
  19. 2.08: Deriving the Autarky Terms of Trade
  20. 2.09: The Motivation for International Trade and Specialization
  21. 2.10: Welfare Effects of Free Trade- Real Wage Effects
  22. 2.11: The Welfare Effects of Free Trade- Aggregate Effects
  23. 2.12: Appendix- Robert Torrens on Comparative Advantage
  24. 03: The Pure Exchange Model of Trade
  25. 3.1: A Simple Pure Exchange Economy
  26. 3.2: Determinants of the Terms of Trade
  27. 3.3: Example of a Trade Pattern
  28. 3.4: Three Traders and Redistribution with Trade
  29. 3.5: Three Traders with International Trade
  30. 3.6: The Nondiscrimination Argument for Free Trade
  31. 04: Factor Mobility and Income Redistribution
  32. 4.01: Factor Mobility Overview
  33. 4.02: Domestic Factor Mobility
  34. 4.03: Time and Factor Mobility
  35. 4.04: Immobile Factor Model Overview and Assumptions
  36. 4.05: The Production Possibility Frontier in the Immobile Factor Model
  37. 4.06: Autarky Equilibrium in the Immobile Factor Model
  38. 4.07: Depicting a Free Trade Equilibrium in the Immobile Factor Model
  39. 4.08: Effect of Trade on Real Wages
  40. 4.09: Intuition of Real Wage Effects
  41. 4.10: Interpreting the Welfare Effects
  42. 4.11: Aggregate Welfare Effects of Free Trade in the Immobile Factor Model
  43. 05: The Heckscher-Ohlin (Factor Proportions) Model
  44. 5.01: Chapter Overview
  45. 5.02: Heckscher-Ohlin Model Assumptions
  46. 5.03: The Production Possibility Frontier (Fixed Proportions)
  47. 5.04: The Rybczynski Theorem
  48. 5.05: The Magnification Effect for Quantities
  49. 5.06: The Stolper-Samuelson Theorem
  50. 5.07: The Magnification Effect for Prices
  51. 5.08: The Production Possibility Frontier (Variable Proportions)
  52. 5.09: The Heckscher-Ohlin Theorem
  53. 5.10: Depicting a Free Trade Equilibrium in the Heckscher-Ohlin Model
  54. 5.11: National Welfare Effects of Free Trade in the Heckscher-Ohlin Model
  55. 5.12: The Distributive Effects of Free Trade in the Heckscher-Ohlin Model
  56. 5.13: The Compensation Principle
  57. 5.14: Factor-Price Equalization
  58. 5.15: The Specific Factor Model- Overview
  59. 5.16: The Specific Factor Model
  60. 5.17: Dynamic Income Redistribution and Trade
  61. 06: Economies of Scale and International Trade
  62. 6.1: Chapter Overview
  63. 6.2: Economies of Scale and Returns to Scale
  64. 6.3: Gains from Trade with Economies of Scale- A Simple Explanation
  65. 6.4: Monopolistic Competition
  66. 6.5: Model Assumptions: Monopolistic Competition
  67. 6.6: The Effects of Trade in a Monopolistically Competitive Industry
  68. 6.7: The Costs and Benefits of Free Trade Under Monopolistic Competition
  69. 07: Trade Policy Effects with Perfectly Competitive Markets
  70. 7.01: Basic Assumptions of the Partial Equilibrium Model
  71. 7.02: Depicting a Free Trade Equilibrium- Large and Small Country Cases
  72. 7.03: The Welfare Effects of Trade Policies- Partial Equilibrium
  73. 7.04: Import Tariffs- Large Country Price Effects
  74. 7.05: Import Tariffs- Large Country Welfare Effects
  75. 7.06: The Optimal Tariff
  76. 7.07: Import Tariffs- Small Country Price Effects
  77. 7.08: Import Tariffs- Small Country Welfare Effects
  78. 7.09: Retaliation and Trade Wars
  79. 7.10: Import Quotas- Large Country Price Effects
  80. 7.11: Administration of an Import Quota
  81. 7.12: Import Quota- Large Country Welfare Effects
  82. 7.13: Import Quota- Small Country Price Effects
  83. 7.14: Import Quota- Small Country Welfare Effects
  84. 7.15: The Choice between Import Tariffs and Quotas
  85. 7.16: Export Subsidies: Large Country Price Effects
  86. 7.17: Export Subsidies: Large Country Welfare Effects
  87. 7.18: Countervailing Duties
  88. 7.19: Voluntary Export Restraints (VERs): Large Country Price Effects
  89. 7.20: Administration of a Voluntary Export Restraint
  90. 7.21: Voluntary Export Restraints: Large Country Welfare Effects
  91. 7.22: Export Taxes- Large Country Price Effects
  92. 7.23: Export Taxes- Large Country Welfare Effects
  93. 08: Domestic Policies and International Trade
  94. 8.1: Chapter Overview
  95. 8.2: Domestic Production Subsidies
  96. 8.3: Production Subsidies as a Reason for Trade
  97. 8.4: Production Subsidy Effects in a Small Importing Country
  98. 8.5: Domestic Consumption Taxes
  99. 8.6: Consumption Taxes as a Reason for Trade
  100. 8.7: Consumption Tax Effects in a Small Importing Country
  101. 8.8: Equivalence of an Import Tariff with a Domestic (Consumption Tax plus Production Subsidy)
  102. 09: Trade Policies with Market Imperfections and Distortions
  103. 9.01: Chapter Overview
  104. 9.02: Imperfections and Distortions Defined
  105. 9.03: The Theory of the Second Best
  106. 9.04: Unemployment and Trade Policy
  107. 9.05: The Infant Industry Argument and Dynamic Comparative Advantage
  108. 9.06: The Case of a Foreign Monopoly
  109. 9.07: Monopoly and Monopsony Power and Trade
  110. 9.08: Public Goods and National Security
  111. 9.09: Trade and the Environment
  112. 9.10: Economic Integration- Free Trade Areas Trade Creation and Trade Diversion
  113. 10: Political Economy and International Trade
  114. 10.1: Chapter Overview
  115. 10.2: Some Features of a Democratic Society
  116. 10.3: The Economic Effects of Protection: An Example
  117. 10.4: The Consumers' Lobbying Decision
  118. 10.5: The Producers' Lobbying Decision
  119. 10.6: The Government's Decision
  120. 10.7: The Lobbying Problem in a Democracy
  121. 11: Evaluating the Controversy between Free Trade and Protectionism
  122. 11.1: Introduction
  123. 11.2: Economic Efficiency Effects of Free Trade
  124. 11.3: Free Trade and the Distribution of Income
  125. 11.4: The Case for Selected Protection
  126. 11.5: The Economic Case against Selected Protection
  127. 11.6: Free Trade as the Pragmatically Optimal Policy Choice