Traditional Welfare Analysis of a Small CountryÂ’s Trade Policy: A Note

Michael S. Visser ()
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Michael S. Visser: University of Oregon Economics Department (Student)

University of Oregon Economics Department Working Papers from University of Oregon Economics Department

Abstract: This paper reexamines the standard welfare analysis of export subsidies under perfect competition, pointing out that the prevailing textbook analysis ignores the incentives of foreign producers to sell at the highest price possible, which may be in the domestic market. This substantially alters welfare analysis and perversely leads to intra-industry trade. This is well-understood in the literature, though not included in standard undergraduate textbooks.

Keywords: trade policy; welfare analyis; teaching (search for similar items in EconPapers)
JEL-codes: A20 F10 (search for similar items in EconPapers)
Pages: 11
Date: 2003-11-01
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Persistent link: https://EconPapers.repec.org/RePEc:ore:uoecwp:2004-8

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