Quotas and other trade barriers: unotes13.pdf
A quota is a quantity restriction, usually on imports, but it could be on
exports. (tariffs could be though of as price restrictions)
Suppose that a good is available from foreign suppliers at a f
Trade Protection and Promotion: Tariffs
unotes12.pdf, chapter 18
Tariffs are just taxes on trade.
Suppose that good X is imported. Let p denote domestic prices (producer
and consumer prices), and let p* denote world prices.
Bear in mind, however,
Multinational and Foreign Direct Investment
unotes11.pdf (Ch 16)
Foreign direct investment (FDI) refers to firms or individuals owning
controlling interests in foreign firms.
1. Review of empirical evidence
2. Dunning's OLI, joi
Trade in Factors of Production:
One good, X
Two factors of production, L and K
Two countries, h and f.
World Edgeworth Box.
Total dimensions are the total world endowments of labor and capital.
Demand and Per-Capita Income:
1. Different tastes between countries as a determinant of demand.
If everything about production two economies is identical, then each
country will import the good for which it has a high preference
Imperfect Competition and Increasing Returns to Scale II: notes8.pdf
Gains through increased product diversity for consumers
Gains through increased variety of specialized intermediate inputs for
TABLE: THE COMPOSITION OF WORLD MERCHANDISE
Imperfect Competition and Increasing Returns to Scale I:
This is the first of two sets of notes on increasing returns to scale and
imperfect competition as a source of trade and gains from trade (Ch11)
This set focuses on homogeneous goods (fir
Distortions and Government Policies as Determinants of Trade, unotes6
1. So far, we have considered the effects of trade on countries with
"perfect" markets. Prices accurately reflect the cost of resources needed
to produce goods, and the va
Factor endowments as a basis for trade: unotes5.pdf (chapters 8, 9)
1. The No-Trade Model Revisited
Countries have identical technologies
Countries have identical relative factor endowments
Constant returns to scale in production
Bases for Trade - unotes4
The No-Trade Model
1. Identical production functions in all countries
2. Same relative factor endowments in all countries
3. Constant returns to scale
4. Identical, Homogeneous preferences in all countries
5. No Distorti
Gains from Trade: unotes3
1. Mutual gains from exchange
2. Gains from specialization
3. The gains-from-trade theorem
4. The distribution of gains between countries
5. The distribution of gains between individuals within countries
The ability to trade (v
Review of Production Theory: Chapter 2
Understand the determinants of what goods and services a country produces
efficiently and which inefficiently.
Understand how the processes of a market economy produces outcomes
(allocations), and whether or n
Review of Consumer Theory, Closed Economy and World Equilibrium:
Chapter 3,4. (unotes2.pdf)
1. Maximizing utility subject to a budget constraint.
px/py = MRS.
2. The assumption that the utility function is homogeneous.
3. Pareto optimality of an allocatio
Strategic Trade Policy
1. Environment: imperfectly competitive firms with increasing returns to
2. Simplest model: three countries. US, EU, and ROW. US and EU each
have one firm (e.g., Boeing and Airbus). Assume that all out