【国际贸易理论课件】【International Trade Theories】CHAPTER 5Nontariff Barriers NTBs to Trade.ppt

ch 05 CHAPTER 5 Nontariff Barriers (NTBs) to Trade Import Quotas to Protect Domestic Industries Common in Western Europe after WW II Not used for manufactured goods today by developed nations Prohibited by WTO Often used for agricultural products Tariff quotas Quotas used in all sectors in developing countries Economic Effects of Quotas Raises domestic price of imported commodity Percentage increase is implicit tariff equivalent Tariff equivalent calculated by subtracting foreign from domestic price, dividing result by foreign price Economic Effects of Quotas Import consumption declines Consumption and Production of domestic substitutes expands Resources drawn from other (presumably more efficient) industries No revenue to government Quota rents Auctioning import licenses Economic Effects of Quotas Replaced market mechanism with government decisions No limit to differential between domestic and world prices Rise in domestic demand raises domestic price, leaves admissible imports unchanged Raises production and consumption costs of protection, forces further misallocation of resources and less desirable consumption patterns A quota and tariff are equivalent if demand and supply are stationary, perfect competition exists in all markets, and government auctions import licenses. Domestic Market for Cars in aSmall Importing Country Tariff and QuotaWhen Domestic Demand Rises Economic Effects of Quotas With a reduction in domestic supply, quotas are more harmful to welfare than tariffs. A reduction in domestic demand results in more harm from tariffs than from quotas. In case of tariff, price is constant, quantity adjusts. In case of quota, quantity is constant. price adjusts. Economic Effects of Quotas Theory of effective protection Quotas on imported raw materials raise production costs of final output. Import duties on raw materials are sometimes rebated, no rebate occurs with quotas. Monopoly effect Cumbersome administrative apparatus Corruptibility of license pr