國際經(jīng)濟(jì)學(xué)英文課件：Lecture 6 The Instruments of Trade Policy

1、Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-1Lecture 6: The Instruments of Trade Policy Key ReadingK&O(2011),International Economics: Theory and Policy . Chap8Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-2Outlines Partial equilibrium analysis of tariffs: supply,

2、demand and trade in a single industry The Economic Effects of Tariffs Export subsidies Import quotas Voluntary export restraints Local content requirementsCopyright 2006 Pearson Addison-Wesley. All rights reserved.8-3Types of Tariffs A specific tariff is levied as a fixed charge for each unit of imp

3、orted goods.For example, $1 per kg of cheese An ad valorem tariff is levied as a fraction of the value of imported goods.For example, 25% tariff on the value of imported cars.Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-4productDuty rateLive chickens0.9 cents eachHams1.4 cents/kgBicy

4、cles11%Cigarettes41.7 cents/kg+0.9%High-quality beef cuts4%mushrooms8.8 cents/kg+20%Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-5 Lets now analyze how tariffs affect the economy.Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-6Supply, Demand and Trade in a Single Indust

5、ry Lets construct a model measuring how a tariff affects a single market, say that of wheat. Suppose that in the absence of trade the price of wheat in the foreign country is lower than that in the domestic country.With trade the foreign country will export: construct an export supply curveWith trad

6、e the domestic country will import: construct an import demand curveCopyright 2006 Pearson Addison-Wesley. All rights reserved.8-7Supply, Demand and Trade in a Single Industry (cont.) An export supply curve is the difference between the quantity that foreign producers supply minus the quantity that

7、foreign consumers demand, at each price. An import demand curve is the difference between the quantity that domestic consumers demand minus the quantity that domestic producers supply, at each price.Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-8Supply, Demand and Trade in a Single In

8、dustry (cont.)Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-9Supply, Demand and Trade in a Single Industry (cont.)Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-10Supply, Demand and Trade in a Single Industry (cont.) In equilibrium, import demand = export supplydomestic

9、demand domestic supply =foreign supply foreign demand In equilibrium, world demand = world supplyCopyright 2006 Pearson Addison-Wesley. All rights reserved.8-11Supply, Demand and Trade in a Single Industry (cont.)Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-12The Economic Effects of

10、Tariffs Consumer and producer surplus(review) The Economic Effects of Tariffs for a small country The Economic Effects of Tariffs for a large country Costs and Benefits of TariffsCopyright 2006 Pearson Addison-Wesley. All rights reserved.8-13Consumer and producer surplus(review) A tariff raises the

11、price of a good in the importing country, so we expect it to hurt consumers and benefit producers there. In addition, the government gains tariff revenue from a tariff. How to measure these costs and benefits? We use the concepts of consumer surplus and producer surplus.Copyright 2006 Pearson Addiso

12、n-Wesley. All rights reserved.8-14Consumer Surplus Consumer surplus measures the amount that a consumer gains from a purchase by the difference in the price he pays from the price he would have been willing to pay.The price he would have been willing to pay is determined by a demand (willingness to

13、buy) curve.When the price increases, the quantity demanded decreases as well as the consumer surplus.Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-15Consumer Surplus (cont.)Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-16Producer Surplus Producer surplus measures the am

14、ount that a producer gains from a sale by the difference in the price he receives from the price he would have been willing to sell at.The price he would have been willing to sell at is determined by a supply (willingness to sell) curve.When price increases, the quantity supplied increases as well a

15、s the producer surplus.Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-17Producer Surplus (cont.)Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-18The Economic Effects of Tariffs for a small country Small country The effect of a tariff on production The effect of a tariff o

16、n consumerCopyright 2006 Pearson Addison-Wesley. All rights reserved.8-19 Small countryA country whose trade (or realistic changes in its trade) does not affect international product price Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-20Copyright 2006 Pearson Addison-Wesley. All right

17、s reserved.8-21 The effect of a tariff on producerGain or lose by your intuition?How much? aCopyright 2006 Pearson Addison-Wesley. All rights reserved.8-22 The effect of a tariff on consumerGain or lose?Lose: a+b+c+dCopyright 2006 Pearson Addison-Wesley. All rights reserved.8-23 The tariff as govern

18、ment revenueHow much?cCopyright 2006 Pearson Addison-Wesley. All rights reserved.8-24 The net national loss from a tariffConsumers lose: a+b+c+dProducers gain: aGovernment collects: cNet national loss from tariff: b+dCopyright 2006 Pearson Addison-Wesley. All rights reserved.8-25 What b and d tell u

19、s behind it? Why b and d is the loss of well-being ( dead-weight loss)? Consumption effect (d) Production effect (b)Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-26 Consumption effect (d)The inefficiency caused by a tariff (or similar policy, like an import quota or an export subsidy)

20、 because the policy causes a reduction in the domestic quantity demanded of the product. The loss of consumer surplus for those domestic consumers squeezed out of buying the product because the policy artificially raises the domestic price of the productCopyright 2006 Pearson Addison-Wesley. All rig

21、hts reserved.8-27 Production effect (b)The inefficiency caused by a tariff (or similar policy, like an import quota or an export subsidy) because the policy causes an increase in the domestic quantity supplied of the product. The waste of resources used to produce units with domestic production cost

22、s that exceed the world price (the world standard for production cost).Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-28The Economic Effects of Tariffs for large country Large country The effect of a tariff on production The effect of a tariff on consumerCopyright 2006 Pearson Addison-

23、Wesley. All rights reserved.8-29 Large country a country whose trade (or realistic changes in its trade) affects international product priceCopyright 2006 Pearson Addison-Wesley. All rights reserved.8-30The Effects of a Tariff (cont.) Thus, a tariff will make the price of a good rise in the domestic

24、 market and will make the price of a good fall in the foreign market, until the price difference equals the tariff.PT P*T = tPT = P*T + tThe price of the good in foreign (world) markets should fall if there is a significant drop in the quantity demanded of the good caused by the domestic tariff.Copy

25、right 2006 Pearson Addison-Wesley. All rights reserved.8-31Costs and Benefits of Tariffs (cont.)Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-32The Effects of a Tariff (cont.) Because the price in domestic markets rises (to PT), domestic producers should supply more and domestic consu

26、mers should demand less.The quantity of imports falls from QW to QT Because the price in foreign markets falls (to P*T), foreign producers should supply less and foreign consumers should demand more.The quantity of exports falls from QW to QT Copyright 2006 Pearson Addison-Wesley. All rights reserve

27、d.8-33The Effects of a Tariff (cont.) The quantity of domestic import demand equals the quantity of foreign export supply when PT P*T = t In this case, the increase in the price of the good in the domestic country is less than the amount of the tariff.Part of the tariff is reflected in a decline of

28、the foreign countrys export price, and thus is not passed on to domestic consumers.But this effect is often not very significant.Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-34Costs and Benefits of Tariffs A tariff raises the price of a good in the importing country, making its consu

29、mer surplus decrease (making its consumers worse off) and making its producer surplus increase (making its producers better off). Also, government revenue will increase.Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-35Costs and Benefits of Tariffs (cont.)Copyright 2006 Pearson Addison-

30、Wesley. All rights reserved.8-36Costs and Benefits of Tariffs (cont.) For a “l(fā)arge” country that can affect foreign (world) prices, the welfare effect of a tariff is ambiguous. The triangles b and d represent the efficiency loss.The tariff distorts production and consumption decisions: producers pro

31、duce too much and consumers consume too little compared to the market outcome. The rectangle e represents the terms of trade gain. The terms of trade increases because the tariff lowers foreign export (domestic import) prices.Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-37Costs and B

32、enefits of Tariffs (cont.) Government revenue from the tariff equals the tariff rate times the quantity of imports.Government revenue = t x QT = c + e Part of government revenue (rectangle e) represents the terms of trade gain, and part (rectangle c) represents part of the value of lost consumer sur

33、plus.The government gains at the expense of consumers and foreigners.Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-38Costs and Benefits of Tariffs (cont.) If the terms of trade gain exceeds the efficiency loss, then national welfare will increase under a tariff, at the expense of fore

34、ign countries.However, this analysis assumes that the terms of trade does not change due to tariff changes by foreign countries (i.e., due to retaliation).Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-39Costs and Benefits of Tariffs (cont.)Copyright 2006 Pearson Addison-Wesley. All ri

35、ghts reserved.8-40Export Subsidy An export subsidy can also be specific or ad valoremA specific subsidy is a payment per unit exported.An ad valorem subsidy is a payment as a proportion of the value exported. An export subsidy raises the price of a good in the exporting country, making its consumer

36、surplus decrease (making its consumers worse off) and making its producer surplus increase (making its producers better off). Also, government revenue will decrease.Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-41Export Subsidy (cont.) An export subsidy raises the price of a good in t

37、he exporting country, while lowering it in foreign countries. In contrast to a tariff, an export subsidy worsens the terms of trade by lowering the price of domestic products in world markets.Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-42Export Subsidy (cont.)Copyright 2006 Pearson

38、Addison-Wesley. All rights reserved.8-43Export Subsidy (cont.) An export subsidy unambiguously produces a negative effect on national welfare( b+d+e+f+g). The triangles b and d represent the efficiency loss.The tariff distorts production and consumption decisions: producers produce too much and cons

39、umers consume too little compared to the market outcome. The area b + c +d+ e + f + g represents the cost of government subsidy. In addition, the terms of trade decreases, because the price of exports falls in foreign markets to P*s.e+f+g is the loss of term of tradeCopyright 2006 Pearson Addison-We

40、sley. All rights reserved.8-44Export Subsidy in Europe The European Unions Common Agricultural Policy sets high prices for agricultural products and subsidizes exports to dispose of excess production.The subsidized exports reduce world prices of agricultural products. The direct cost of this policy

41、for European taxpayers is almost $50 billion.But the EU has proposed that farmers receive direct payments independent of the amount of production to help lower EU prices and reduce production.Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-45Export Subsidy in Europe (cont.)Copyright 200

42、6 Pearson Addison-Wesley. All rights reserved.8-46Import Quota An import quota is a restriction on the quantity of a good that may be imported. This restriction is usually enforced by issuing licenses to domestic firms that import, or in some cases to foreign governments of exporting countries. A bi

43、nding import quota will push up the price of the import because the quantity demanded will exceed the quantity supplied by domestic producers and from imports.Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-47Import Quota (cont.) When a quota instead of a tariff is used to restrict impo

44、rts, the government receives no revenue.Instead, the revenue from selling imports at high prices goes to quota license holders: either domestic firms or foreign governments.These extra revenues are called quota rents.Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-48US Import Quota on S

45、ugarCopyright 2006 Pearson Addison-Wesley. All rights reserved.8-49Voluntary Export Restraint A voluntary export restraint works like an import quota, except that the quota is imposed by the exporting country rather than the importing country. However, these restraints are usually requested by the i

46、mporting country. The profits or rents from this policy are earned by foreign governments or foreign producers.Foreigners sell a restricted quantity at an increased price.Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-50Local Content Requirement A local content requirement is a regulat

47、ion that requires a specified fraction of a final good to be produced domestically. It may be specified in value terms, by requiring that some minimum share of the value of a good represent domestic valued added, or in physical units.Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-51Loc

48、al Content Requirement (cont.) From the viewpoint of domestic producers of inputs, a local content requirement provides protection in the same way that an import quota would. From the viewpoint of firms that must buy domestic inputs, however, the requirement does not place a strict limit on imports,

49、 but allows firms to import more if they also use more domestic parts.Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-52Local Content Requirement (cont.) Local content requirement provides neither government revenue (as a tariff would) nor quota rents. Instead the difference between the

50、 prices of domestic goods and imports is averaged into the price of the final good and is passed on to consumers.Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-53Other Trade Policies Export credit subsidiesA subsidized loan to exportersUS Export-Import Bank subsidizes loans to US expor

51、ters. Government procurementGovernment agencies are obligated to purchase from domestic suppliers, even when they charge higher prices (or have inferior quality) compared to foreign suppliers. Bureaucratic regulationsSafety, health, quality or customs regulations can act as a form of protection and

52、trade restriction.Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-54SummaryTariffExport subsidyImport quotaVoluntary export restraintProducer surplusConsumer surplusGovernment net revenueNational welfareIncreasesIncreasesIncreasesIncreasesNo change:rents to license holdersIncreasesDecre

53、asesDecreasesDecreasesDecreasesDecreasesNo change:rents to foreignersAmbiguous for large country;falls for small country Ambiguous for large country; falls for small countryDecreasesDecreasesCopyright 2006 Pearson Addison-Wesley. All rights reserved.8-55The Effective Rate of Protection The effective

54、 rate of protectionEffective rate of protection(ERP): Percentage by which the entire set of a countrys trade barriers raises an industrys value added per unit of output. Effective rate of protection= (v-v)/v Where:V: value-added after tariffV: value-added before tariffCopyright 2006 Pearson Addison-

55、Wesley. All rights reserved.8-56 Case 1: the tarrif rate on the inputs and the final good is the same. Case 2: the tariff rate on the inputs is larger than the tariff on the final good. Case 3: the tariff rate on the inputs is smaller than the tariff on the final good.Copyright 2006 Pearson Addison-

56、Wesley. All rights reserved.8-57Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-58 For case 3, the effective rate of protection of bicycle industry= (v-v)/v =(99-80)/80=23.8%Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-59 ExerciseFor case 2, 10% tariff on bicycle, 15% ta

57、riff on inputs, what is the effective rate of protection of bicycle industry?For case 1: 10% tariff on bicycle, 10% tariff on inputs, what is the effective rate of protection of bicycle industry?Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-60 ConclusionsThe effective rate of protecti

58、on will be greater than the nominal rate when the industrys output is protected by a higher duty than the tariff duties on its inputs.The effective rate of protection will be smaller than the nominal rate when the industrys output is protected by a lower duty than the tariff duties on its inputs.The

59、 effective rate of protection will be the same as the nominal rate when the industrys output is protected by the same duty as the tariff duties on its inputs.Copyright 2006 Pearson Addison-Wesley. All rights reserved.8-61After class exercise: The Effects of a Tariff (cont.)Copyright 2006 Pearson Add

60、ison-Wesley. All rights reserved.8-62Summary (cont.)1. A tariff decreases the world price of the imported good when a country is “l(fā)arge”, increases the domestic price of the imported good and reduces the quantity traded.2. A quota does the same.3. An export subsidy decreases the world price of the expor