Law and Institutions of International Trade Class 4

1
Law and Institutions of International TradeClass
4

• MGT 3860Z
• Daryl Hanak

2
Implications of Trade Theories

• The main support for free trade arises because
  free trade can raise aggregate economic
  efficiency.
• Trade theory shows that some people will, in
  fact, suffer losses in free trade.
• in the long run
• A country may benefit from free trade even if it
  is less efficient than all other countries in
  every industry.
• A domestic firm may lose out in international
  competition even if it is the lowest cost
  producer in the world.
• losing production even in a highly efficient
  industry can be consistent with an improvement in
  welfare for everyone.
• Protection may be beneficial for an individual
  country.
• Raise domestic welfare, but reduce everyone
  elses, beggar thy neighbour
• Market imperfections might call for interventions
  that would raise general welfare