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Traditional Welfare Analysis of a Small CountryÂ’s Trade Policy: A Note

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Author Info
Michael S. Visser () (University of Oregon Economics Department (Student))
Abstract

This paper reexamines the standard welfare analysis of export subsidies under perfect competition, pointing out that the prevailing textbook analysis ignores the incentives of foreign producers to sell at the highest price possible, which may be in the domestic market. This substantially alters welfare analysis and perversely leads to intra-industry trade. This is well-understood in the literature, though not included in standard undergraduate textbooks.

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File URL: http://economics.uoregon.edu/papers/UO-2004-8_Visser_Welfare_Trade.pdf
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Publisher Info
Paper provided by University of Oregon Economics Department in its series University of Oregon Economics Department Working Papers with number 2004-8.

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Length: 11
Date of creation: 01 Nov 2003
Date of revision:
Handle: RePEc:ore:uoecwp:2004-8

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Related research
Keywords: trade policy; welfare analyis; teaching;

Find related papers by JEL classification:
A20 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - General
F10 - International Economics - - Trade - - - General

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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  1. James A. Brander & Paul Krugman, 1983. "A 'Reciprocal Dumping' Model of International Trade," NBER Working Papers 1194, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Greaney, Theresa M., 2001. "Promoting Imports to Appease Trade Partners: Japan's New Trade Policies," Journal of the Japanese and International Economies, Elsevier, vol. 15(3), pages 253-270, September. [Downloadable!] (restricted)
  3. Brander, James A., 1981. "Intra-industry trade in identical commodities," Journal of International Economics, Elsevier, vol. 11(1), pages 1-14, February. [Downloadable!] (restricted)
    Other versions:
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