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


  • Michael S. Visser

    () (University of Oregon Economics Department (Student))


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.

Suggested Citation

  • Michael S. Visser, 2003. "Traditional Welfare Analysis of a Small CountryÂ’s Trade Policy: A Note," University of Oregon Economics Department Working Papers 2004-8, University of Oregon Economics Department.
  • Handle: RePEc:ore:uoecwp:2004-8

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    trade policy; welfare analyis; teaching;

    JEL classification:

    • A20 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - General
    • F10 - International Economics - - Trade - - - General

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