9 lecture_antidumping

Outcome 2 equity income equality

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Unformatted text preview: ary import surge could cause great damage to domesGc industry. –  criteria for protecGon much easier to saGsfy in the case of AD/ countervailing duGes Procedure: •  Dept. Commerce decides if an import good is sold at “less than fair value” •  Int. Trade Commission (ITC) decides if the import provided “material injury” to the domesGc industry •  No need for presidenGal approval Policy Response to Dumping RaGonale for Trade Policy Despite welfare losses, nearly all countries use tariffs in the early stages of economic development, oeen in industries composed of a small number of firms. BIG QUESTION 1: Why do governments intervene in interna7onal markets? (1). economic efficiency:  ­ ­ if no market failures, the most efficient outcome is the market •  What’s the objecGve? outcome (2). equity (income equality):  ­ ­ Govnernment may be more concerned about the big distribuGonal effects of trade than about moderate increases in economic efficiency (3). increase welfare through strategic behavior (large country) RaGonale for Trade Policy Despite welfare losses, nearly all countries use tariffs in the early stages of economic development, oeen in industries composed of a small number of firms. BIG QUESTION 1: Why do governments intervene in interna7onal markets? (1). economic efficiency:  ­ ­ if no market failures, the most efficient outcome is the market •  What’s the objecGve? outcome (2). equity (income equality):  ­ ­ Government may be more concerned about the big distribuGonal effects of trade than about moderate increases in economic efficiency (3). increase welfare through strategic behavior (large country)...
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