CH 4 - A Society-Centered Approach To Trade Politics Flashcards
State-center approach
- government intervention can raise social welfar
- governments are relatively unconstrained by interest-group demand
Factor-price equalization (Stolper-Samuelson Theorem)
The tendency for international trade to cause factor prices to converge
Factor model
A political model that argues that the politics of trade policy is characterized by competition between labor and capital. The scarce factor will be harmed by trade - lobbied for protection. The abundant factor will benefit from trade and therefore lobby for trade liberalization.
Sectoral model
A political model that argues that the politics of is trade policy is characterized by competition between import-competing and export-oriented industries. Industries that rely heavily on scarce factor will be harmed by trade policy- protectionist. Industries that rely heavily on abundant factor will benefit and will be pro-liberalization.
Factor mobility
The ease with which factors of production can move from one industry to another.
Reciprocal trade agreements act
Congress delegates to the president the authority to reduce tariffs in exchange for equivalent concessions from foreign governments.
Collective action problem
When people will not voluntarily invest time, energy, or money to achieve common goal, but will instead allow others to bear these costs. In other words, these people will be free-riding.
