The Economics of Trade Protection
Over the past two decades there has been a gradual but fundamental change in the nature of trade protection. Even as international negotiation has succeeded in reducing tariffs to low levels, national governments have resorted to a range of increasingly intricate policies to protect their domestic industries from foreign competition. Direct quantitative restrictions on international trade have become particularly widespread. Such nontariff barriers often have very different effects from tariffs and require careful analysis in their own right. This book presents a systematic overview of the modern theory of trade protection. The material in the book divides naturally into four sections. The first section covers trade restrictions in competitive markets, the second trade restrictions and imperfect competition, the third the political economy of trade protection, and the fourth the theory of policy reform. The presentation makes extensive use of diagrams, with the more difficult mathematics included in six appendixes.
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analysis assumed assumption autarky capital Chapter cloth commodities competitive consider consumer surplus consumption country's customs union deadweight loss demand curve distortions domestic firm domestic market domestic price domestic producers economy's effects Equation equivalent export subsidy export tax fall firm's foreign country foreign firm free trade free-trade function given higher home country home firm illustrated in Figure implies import quota imposing income increase indifference curve industry labour lobbying marginal cost monopolist Nash equilibrium number of varieties offer curve oligopoly optimal tariff outcome particular perfect competition political price line product differentiation product variety production subsidy profits protection quantity reaction curve reduced reform relative price rent seeking result revenue seeking risk aversion sector shift slope substitutes tariff level tariff quote tariff rate tariff reduction tariff revenue tariffs and quotas terms of trade tion trade restrictions unit utility valorem tariff welfare improvement world price yields zero