trade diversion Flashcards
1
Q
what is trade diversion
A
theory that derives from country’s entry to customs union
-movement from a low cost foreign producer(outside) to high cost producer in customs union
2
Q
diagram of trade diversion
A
price and quanitity
-q1 dwesmtic supply, q2 domestic demand
-move s up
-increases price
-allowed eu producers, eu supply
-uk supply to q3
-uk demand to q4
3
Q
consequences of trade diversion
A
-customs union negatives
