Partial equilibrium analysis of tariff
Introduction All nations impose some restrictions in the form of tariff (i.e., import tariff and export tariff) and non-tariff barriers (i.e., import quota, dumping, international cartels and export subsidies) on the free flow of international trade. Since these restrictions and regulations deal with the nation’s trade or commerce, they are generally known as trade or commercial policy. Trade restrictions are...
General equilibrium analysis of tariff
Introduction General equilibrium analysis of a tariff is most appropriate when the effect of tariff is examined on the nation as a whole. General equilibrium analysis is more complex in nature. General equilibrium analysis makes use of production possibility curves/ production frontiers/ transformation curve, community indifference curves, or offer curves. General equilibrium analysis of a tariff is generally studies in...
The Optimum Tariff
Introduction Optimal tariffs allow a country to exploit its market power in international trade. A country can improve its terms of trade by unilaterally restricting its exports if it faces a downward-sloping demand for them or restricting its imports if it faces an upward-sloping foreign export supply. This argument against unilateral free trade is over 150 years old but it...
Theories of Interest
Introduction Interest is a reward for capital. In the real economic sense, however, interest implies the return to capital as a factor of production. But for all practical purposes, “interest is the price of capital.” Capital as a factor of production, in real terms, refers to the stock of capital goods (machinery, raw-materials, factory plant etc.). In the money economy, however for...
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