This preview shows page 1. Sign up to view the full content.
Unformatted text preview: Hard to take back a subsidy Domestic market failure-cant be assuming all markets are optimal and functional. It takes some time to end up at perfect equil. Place Response: If problem is domestic, use domestic remedies. For example, production subsidies vs. export subsidies. Exporting environmental problems to developing countries. This is where marginal social cost comes in. Models of median voter theorem and collective action address this problem. Free trade areas: External trade policies are the problem of the ones like NAFTA. Must have common external policy. Labor mobility- try to allow labor to move freely within these countries....
View Full Document
This note was uploaded on 06/10/2010 for the course ECON EMBA taught by Professor Cyrilchang during the Spring '08 term at University of Mississippi Medical Center.
- Spring '08