specific tariffs- are levied as a fixed charge for each unit of a good imported
Ad valorem tariffs- are levied as a proportion of the value of imported good
is a government payment to a domestic producer
is a direct restriction on the quantity if some good that may be imported into a country
tariff rate quota
a lower tariff rate is applied to imports within the quota than those over the quota
consequences of subsides
they help domestic producers in 2 ways.
1. competing against imports
2. gaining export markets
voluntary export restraints (VER)
is a quota on trade imposed by the exporting country, typically at the request of the importing country's government
the extra profit that producers make when supply is artificially limited by an import quota
administrative trade policies
are bureaucratic rules designed to make it difficult for imports to enter a country
Strategic trade policy argument has two components
1. first it is argued that by appropriate actions, a government can help raise national income if it can somehow ensure that the firm or firms that gain first mover advantage in an industry are domestic rather than foreign enterprises
2. is that it might pay a government to intervene in an industry by helping domestic firms overcome barriers to entry created by foreign firms that have already reaped first mover advantage
trade barriers and firms strategy
1. first and most obvious , tariffs barriers raise the cost of exporting products to a country. this may put the firm at a competitive disadvantage to indigenous competition in that country. in respones, the firm may then find it economical to locate production facilities in that country so they can compete on even ground.
2. quotas may limit a firms ability to serve . a country from a locations outside of that country. response might be to set up production facilities inn that country
3. conform to local content regulations, a firm may have to locate more production activities in a given market thin it would otherwise. Same response
first mover advantages
is the advantage gained by the initial ("first-moving") significant occupant of a market segment. It may be also referred to as Technological Leadership.
This advantage may stem from the fact that the first entrant can gain control of resources that followers may not be able to match.
countries sometimes aegue that it is necessary to protect certain industries because they are important for national security. defense related industries often get this kind of attention.
some argue that goverement should use the threat to intervene in trade policy as a bargaining tool to help open foreign markets and force markets and force trading partner to "play by the rules of the game " the US government chinese to enforce intellectual property laws
protecting consumer (204)
many governments have long regulations to protect consumers from unsafe products
EX japan and south korea stop buying beef from the US