Part 1: Background: economic effects of trade and policy Flashcards
What does a broad definition of economic integration state and who defined it?
Senior Nello
Elimination of barriers to the movement of produts and factors of production between group of cuntries and introducign common policies.
What is negative and positive integration?
neg: removal of barriers
pos: introducing common policiesand building common institutions.
What is a narrower definition of E.I?
Who defines it?
Robson
Regionalism: institutional combination of separate economies into a larger econoic bloc.
Promotion of efficiency in resource use on a regional basis.
What does the traditional trade thoeries state?
What theories?
Ricardo, Heckscher-Ohlin
Increased specialisation, comparative advantadges makes world production more efficient leading to more consumer possibilities.
What does the new trade theory state?
What theorist?
Krugman
trade leads to advantadge in economies of scale in production or differentiated goods leading to lower prices, increased range of goods.
What does new new trade theory say?
Who?
Melitz
Krugman but with heterogenous firms and trade costs leading to the least productive frms to leave the market leading to increased total production
What is an “ad volerem tariff”?
A tariff which is a certain percentage
What is a specific tariff?
A fixed amount per quantity
What is the difference between large and small economies?
Small economies are only prace takers = can not affect the world price of a good
Large economies can affect the world price and therefore the outcome of a tariff osv.
An economy can be large in one good (being a big producer) while still being small in other aspects
If a small economy imposes a tariff, what will happen with the price, supply and demand, what will happen w. welfare?
The tariff will lead to the domestic price rising to (Pw + T)
Higher price will means that the producers can produce more
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