Week_4_Course_Materials

Week_4_Course_Materials - Government Influence on Trade...

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Government Influence on Trade
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Rationale for Government Involvement G Institutional – Rules of the Game G Allocation – Externalities, Public Goods G Distribution – Equity, Equality G Stabilization – Growth, Employment, Prices G Protection – Essential Industries, National Identity G Relationships – with Other Countries
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Instruments of Trade Policy G Tariffs G Import Quotas G Voluntary Export Restraint G Subsidies G Local Content Requirement G Administrative Trade Policies G Antidumping Policies
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Tariffs Are taxes levied on imports. Specific tariffs – a fixed charge for each unit Ad valorem – a percentage of the value of goods G Tariff raises the cost of goods to consumer G Government gains revenue G Domestic producers protected from foreign competitors
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Import Quotas and Export Restrictions A direct restriction imposed on the quantity of goods. G Benefit domestic producers by limiting competition G Hurt consumers by higher prices
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Subsidies A government payment to a domestic producer. G Lower costs of domestic products G Benefit special interest groups G Taxpayers pay for them
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A Local Content Requirement Demand that some specific fraction of a good is produced domestically. G Domestic producers of component parts benefit G Consumers are hurt by increased prices of imported components
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Administrative Policies Bureaucratic rules making it difficult for imports to enter a country. G Domestic producers are protected G Consumers do not have an open access to foreign products.
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Selling goods in a foreign market below their production costs or fair market value. G
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This note was uploaded on 02/24/2010 for the course ACCOUNTING 578844 taught by Professor Mctosh during the Spring '10 term at UCLA.

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Week_4_Course_Materials - Government Influence on Trade...

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