Protectionism Flashcards
1
Q
What are the main reasons for protectionism?
A
Responses to dumping; Responses to trade deficit; Providing employment; Protect infant industry; Protect sunset industry; Raise tax revenue
2
Q
What are the arguments against trade barriers?
A
Danger of retaliation; Higher prices for consumers; Higher costs for home producers; Monopoly for domestic firms
3
Q
What are the types of protectionism?
A
Tariff; Import quota; Subsidies
4
Q
Describe graphically what tariffs do
A
Tariffs increase the previously perfectly elastic world supply price upwards towards domestic price levels; Consumer surplus loss and deadweight loss (triangles)
5
Q
Why should we have barriers?
A
Job protection; Less wage suppression
6
Q
Why shouldn’t we have barriers (benefits of globalisation)?
A
- More competition for domestic firms
- Specialisation
- Political harmony
