logging in or signing up 02 trade theory Dolorada Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINTLite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 2915 Category: Education License: All Rights Reserved Like it (0) Dislike it (0) Added: January 22, 2008 This Presentation is Public Favorites: 2 Presentation Description No description available. Comments Posting comment... By: kenderson_03 (9 month(s) ago) Hi. I am a retired guy helping my daughter with this subject. I would appreciate being able to download the presentation. Saving..... Post Reply Close Saving..... Edit Comment Close By: narakasura (11 month(s) ago) please allow to down load this ppt Saving..... Post Reply Close Saving..... Edit Comment Close By: beens (12 month(s) ago) plz send me dis ppt on my email Saving..... Post Reply Close Saving..... Edit Comment Close By: dheerajtiwari (15 month(s) ago) pls send me the presentation Saving..... Post Reply Close Saving..... Edit Comment Close By: rajeshrazz123 (16 month(s) ago) It was presented in short & presise manner,what one needs in power presentation.too good,.will u send me a soft copy of this ppt. Saving..... Post Reply Close Saving..... Edit Comment Close loading.... See all Premium member Presentation Transcript Commerce and Coalitions: Review of International Trade Theory Commerce and CoalitionsComparative Advantage: Comparative Advantage 1. Comparative advantage –› trade 2. Gains from trade in an industry 3. Effects of a tariff1. Comparative Advantage → → Trade: 1. Comparative Advantage → → Trade Different productivity Different technology Different factor endowments Definition: Lower relative price (not necessarily absolute)Comparative Advantage: Comparative Advantage Technology: 1 K + 2 L = 1 Textile 2 K + 1 L = 1 Iron Factor endowments: Australia has 4 K and 2 L (2 iron or 1 tex) Bulgaria has 2 K and 4 L (2 tex or 1 iron) Example: Common technology, different factor endowments:Comparative advantage: Comparative advantage Iron Textiles A B W PA: Iron = 1/2 Textile PB: Iron = 2 Textile PWorld: 1 Iron = 1 Textile 2 1 1 2Conclusions:: Conclusions: Trade improves welfare because higher indifference curves become reachable Trade lowers price of Textiles in capital-rich country A, hurting laborers Trade lowers price of Iron in labor-rich country B, hurting capital owners Intuition: Scarcity → High price. Trade reduces scarcity2. Gains from trade in an industry Importing country (PD > PW): 2. Gains from trade in an industry Importing country (PD > PW) Q P S D PD QD PW QCW QPW PD: Domestic price PW: World price2. Gains from trade in an industry Importing country (PD > PW): 2. Gains from trade in an industry Importing country (PD > PW) Q P S D PD QD PW QCW QPW Value of imports2. Gains from trade in an industry Importing country (PD > PW): 2. Gains from trade in an industry Importing country (PD > PW) Q P S D PD QD PW QCW QPW Consumer gains: QD (PD - PW) + 1/2 (QCW - QD)(PD - PW) Consumer gain2. Gains from trade in an industry Importing country (PD > PW): 2. Gains from trade in an industry Importing country (PD > PW) Q P S D PD QD PW QCW QPW Producer loss: QPW (PD - PW) + 1/2(QD - QPW)(PD - PW) Welfare Gains > Losses Producer loss2. Gains from trade in an industry Exporting country (PD < PW): 2. Gains from trade in an industry Exporting country (PD < PW) Q P S D PD QD PW QPW QCW Value of exports PD: Domestic price PW: World price2. Gains from trade in an industry Exporting country (PD < PW): 2. Gains from trade in an industry Exporting country (PD < PW) Q P S D PD QD PW QPW QCW Producer gain: QD (PW - PD) + 1/2(QPW - QD)(PW - PD) Producer gains2. Gains from trade in an industry Exporting country (PD < PW): 2. Gains from trade in an industry Exporting country (PD < PW) Q P S D PD QD PW QPW QCW Consumer loss: QCW (PW - PD) + 1/2(QD - QCW)(PW - PD) Consumer loss Welfare Gains > Losses2. Gains from trade in an industry: 2. Gains from trade in an industry Conclusions: - Trade increases welfare - Winners and losers - Compensation? Importing country Exporting country P P Q Q S D S D Pl Cg Cg Pg Cl Pg3. Effects of a tariff: 3. Effects of a tariff Q P S D PD PW QCW QPW PD: Domestic price PW: World price Imports with no tariff PT PT: Price with tariff QPT QCT Imports with tariff3. Effects of a tariff: 3. Effects of a tariff Q P S D PD PW QCW QPW Consumer loss: A + B + C + D Imports with no tariff PT QPT QCT Imports with tariff A B C D3. Effects of a tariff: 3. Effects of a tariff Q P S D PD PW QCW QPW Imports with no tariff PT QPT QCT Imports with tariff Gains: Producer gains: A A Government gains: C C Welfare loss: B D B + DWhy not compensate the losers?: Why not compensate the losers? Concentrated costs, diffuse benefits Incentives to defect Economic change shifts political power Bargaining Why bother?Stolper-Samuelson: Stolper-Samuelson Intuition: scarcity -> high price Factors of production that are more scarce domestically than globally have a higher price in the absence of trade Domestically abundant factors are more valuable if there is trade Domestic coalitions should depend on which factors are abundantTrade and Cleavages: Trade and Cleavages Change occurs when: Trade increases (transport costs decrease) Relative factor endowments change (development: K increases) Land-Labor ratio Low K High K High (land) Low (land) (class conflict) (urban- rural) (urban- rural) (class conflict) You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.
02 trade theory Dolorada Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINTLite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 2915 Category: Education License: All Rights Reserved Like it (0) Dislike it (0) Added: January 22, 2008 This Presentation is Public Favorites: 2 Presentation Description No description available. Comments Posting comment... By: kenderson_03 (9 month(s) ago) Hi. I am a retired guy helping my daughter with this subject. I would appreciate being able to download the presentation. Saving..... Post Reply Close Saving..... Edit Comment Close By: narakasura (11 month(s) ago) please allow to down load this ppt Saving..... Post Reply Close Saving..... Edit Comment Close By: beens (12 month(s) ago) plz send me dis ppt on my email Saving..... Post Reply Close Saving..... Edit Comment Close By: dheerajtiwari (15 month(s) ago) pls send me the presentation Saving..... Post Reply Close Saving..... Edit Comment Close By: rajeshrazz123 (16 month(s) ago) It was presented in short & presise manner,what one needs in power presentation.too good,.will u send me a soft copy of this ppt. Saving..... Post Reply Close Saving..... Edit Comment Close loading.... See all Premium member Presentation Transcript Commerce and Coalitions: Review of International Trade Theory Commerce and CoalitionsComparative Advantage: Comparative Advantage 1. Comparative advantage –› trade 2. Gains from trade in an industry 3. Effects of a tariff1. Comparative Advantage → → Trade: 1. Comparative Advantage → → Trade Different productivity Different technology Different factor endowments Definition: Lower relative price (not necessarily absolute)Comparative Advantage: Comparative Advantage Technology: 1 K + 2 L = 1 Textile 2 K + 1 L = 1 Iron Factor endowments: Australia has 4 K and 2 L (2 iron or 1 tex) Bulgaria has 2 K and 4 L (2 tex or 1 iron) Example: Common technology, different factor endowments:Comparative advantage: Comparative advantage Iron Textiles A B W PA: Iron = 1/2 Textile PB: Iron = 2 Textile PWorld: 1 Iron = 1 Textile 2 1 1 2Conclusions:: Conclusions: Trade improves welfare because higher indifference curves become reachable Trade lowers price of Textiles in capital-rich country A, hurting laborers Trade lowers price of Iron in labor-rich country B, hurting capital owners Intuition: Scarcity → High price. Trade reduces scarcity2. Gains from trade in an industry Importing country (PD > PW): 2. Gains from trade in an industry Importing country (PD > PW) Q P S D PD QD PW QCW QPW PD: Domestic price PW: World price2. Gains from trade in an industry Importing country (PD > PW): 2. Gains from trade in an industry Importing country (PD > PW) Q P S D PD QD PW QCW QPW Value of imports2. Gains from trade in an industry Importing country (PD > PW): 2. Gains from trade in an industry Importing country (PD > PW) Q P S D PD QD PW QCW QPW Consumer gains: QD (PD - PW) + 1/2 (QCW - QD)(PD - PW) Consumer gain2. Gains from trade in an industry Importing country (PD > PW): 2. Gains from trade in an industry Importing country (PD > PW) Q P S D PD QD PW QCW QPW Producer loss: QPW (PD - PW) + 1/2(QD - QPW)(PD - PW) Welfare Gains > Losses Producer loss2. Gains from trade in an industry Exporting country (PD < PW): 2. Gains from trade in an industry Exporting country (PD < PW) Q P S D PD QD PW QPW QCW Value of exports PD: Domestic price PW: World price2. Gains from trade in an industry Exporting country (PD < PW): 2. Gains from trade in an industry Exporting country (PD < PW) Q P S D PD QD PW QPW QCW Producer gain: QD (PW - PD) + 1/2(QPW - QD)(PW - PD) Producer gains2. Gains from trade in an industry Exporting country (PD < PW): 2. Gains from trade in an industry Exporting country (PD < PW) Q P S D PD QD PW QPW QCW Consumer loss: QCW (PW - PD) + 1/2(QD - QCW)(PW - PD) Consumer loss Welfare Gains > Losses2. Gains from trade in an industry: 2. Gains from trade in an industry Conclusions: - Trade increases welfare - Winners and losers - Compensation? Importing country Exporting country P P Q Q S D S D Pl Cg Cg Pg Cl Pg3. Effects of a tariff: 3. Effects of a tariff Q P S D PD PW QCW QPW PD: Domestic price PW: World price Imports with no tariff PT PT: Price with tariff QPT QCT Imports with tariff3. Effects of a tariff: 3. Effects of a tariff Q P S D PD PW QCW QPW Consumer loss: A + B + C + D Imports with no tariff PT QPT QCT Imports with tariff A B C D3. Effects of a tariff: 3. Effects of a tariff Q P S D PD PW QCW QPW Imports with no tariff PT QPT QCT Imports with tariff Gains: Producer gains: A A Government gains: C C Welfare loss: B D B + DWhy not compensate the losers?: Why not compensate the losers? Concentrated costs, diffuse benefits Incentives to defect Economic change shifts political power Bargaining Why bother?Stolper-Samuelson: Stolper-Samuelson Intuition: scarcity -> high price Factors of production that are more scarce domestically than globally have a higher price in the absence of trade Domestically abundant factors are more valuable if there is trade Domestic coalitions should depend on which factors are abundantTrade and Cleavages: Trade and Cleavages Change occurs when: Trade increases (transport costs decrease) Relative factor endowments change (development: K increases) Land-Labor ratio Low K High K High (land) Low (land) (class conflict) (urban- rural) (urban- rural) (class conflict)