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Chapter 21: Q.16 (page 522)

Why would countries promote protectionist laws, while also negotiate for freer trade internationally?

Short Answer

Expert verified

Countries promote protectionist laws, while also negotiating for freer trade internationally due to domestic special interests.

Step by step solution

01

Step 1. Meaning

Protectionism is a trade policy that allowed the government of the country to impose tariffs on foreign goods and services to protect or boost the domestic production of goods and services

02

Step 2. Explanation 

Countries adopt protectionist policies to protect their domestic industries from foreign competition and protect jobs in these industries. But at the same time, they want their industries to gain from international trade. So, they argue for freer international trade to boost their exports. By preventing stronger protectionist measures, international agreements can serve as a political counterweight to domestic special interests.

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Most popular questions from this chapter

The country of Pepperland exports steel to the Land of Submarines. Information for the quantity demanded (Qd) and quantity supplied (Qs) in each country, in a world without trade, are given in Table 21.6 and Table 21.7.

a. What would be the equilibrium price and quantity in each country in a world without trade? How can you tell?

b. What would be the equilibrium price and quantity in each country if trade is allowed to occur? How can you tell?

c. Sketch two supply and demand diagrams, one for each country, in the situation before trade.

d. On those diagrams, show the equilibrium price and the levels of exports and imports in the world after trade.

e. If the Land of Submarines imposes an antidumping import quota of 30, explain in general terms whether it will benefit or injure consumers and producers in each country.

f. Does your general answer change if the Land of Submarines imposes an import quota of 70?

Name several of the international treaties where countries negotiate with each other over trade policy.

Microeconomic theory argues that it is economically rationale (and profitable) to sell additional output as long as the price covers the variable costs of production. How is this relevant to the determination of whether dumping has occurred?

How can governments identify good candidates for infant industry protection? Can you suggest some key characteristics of good candidates? Why are industries like computers not good candidates for infant industry protection?

How is international trade, taken as a whole, likely

to affect the average level of wages?
See all solutions

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