The political economy of trade policy
13 important questions on The political economy of trade policy
What is the efficiency case for free trade?
How do protected markets limit gains from external economies of scale?
How do protected markets limit gains from internal economies of scale?
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Why does free trade offer more opportunities for learning and innovation?
What is rent seeking?
What does a political argument for free trade reflect?
The standard view of most international economists (aka the US)
2. There are other benefits from free trade that add to the costs of protectionist policies.
3. Any attempt to pursue sophisticated deviations from free trade will be subverted by the political process.
What is the terms of trade argument for a tariff?
What policy would the terms of trade argument dictate for export sectors?
What are the limitations to the terms of trade argument?
-Large countries will face retaliation from other large countries.
What is the domestic failure argument against free trade?
How convincing is the market failure argument?
2. Economists cannot diagnose market failure well enough to prescribe policy.
Definition of a problem of collective action
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