Lecture Plan - Trade Tariffs and Welfare
Estimated time - 1.30 minutes
Aims
To look at examples of the effects of trade creation/diversion
To explore the similarities of import quotas and restrictive licensing
to derive appropriate policy steps from this analysis
to show how the analysis in terms of macro institutions like the GATT and the WTO.
Learning objectives
Students should understand what a tariff and a deadweight loss is, be able to compute the 'before and after' effects of each type of tariff and quota imposition, and be able to argue for and against a policy on the grounds of free trade theory.
Introduction
Last week we saw the differences between trade creation, trade destruction, and the welfare effects of both. We finished the history of the EU, showed some data, and did some institutional analysis with our friend Beach.
This week we'll look at the effects of tariffs, import quotas, and restrictive licensing, and derive some interesting and unexpected results from the analysis.
Further reading
• El-Agraa, A.M., The European Union: Economics and Policies, 6th ed., pgs 1-19 and 72-79,
337.142 AGR.
• McDonald, F. and Dearden, S. European Economic Integration, 3rd ed., pgs 34-53, 337.142 MCD
Watch the slideshow below, or click on the 'slideshare' icon in the bottom left hand corner to download it.
Download the handout by right clicking the image below:
