普格尔_国际经济学课件chapter10 arguments-for-and-against-protection

1、Chapter 10 Arguments for and againstprotectionObjective（目标）To examine a variety of arguments proposing that import protection（进口保护） is good for the country because it allows the country to address some market shortcoming（解决一些市场缺陷 ）) or to achieve some objective other than economic efficiency（经济效率）.n

2、 A tariff（关税） or non-tariff barrier （NTB非关税壁垒） to import of a product can :n (1) increase domestic production（国内生产） of the product.n (2) increase employment（就业） of labor and other resources in this domestic production.n (3) decrease domestic consumption（国内消费） of the product.n (4) increase government

3、 revenue.n (5) alter the distribution（分配） of income or well-being in the industry.Basic Tariff AnalysisFigure 8-4: Effects of a TariffWorld marketForeign marketHome marketPrice, PPrice, PPrice, PXSSS*2P1TPWtP*T3MDD*DQuantity, QQTQuantity, QQuantity, QQWFive generic arguments in favor oftariffs:(1) I

4、f there is something extra good about local production of a product, then a tariff can be good for the country, because the tariff leads to more domestic production of the product.(2) If there is something extra good about employing people or other resources in producing a product, then a tariff can

5、 be good for the country, because the tariff leads to more employment in the sector as a local production of the produce increases.(3) If there is something extra bad about local consumption of a product, then a tariff can be good for the country, because the tariff leads to less domestic consumptio

6、n of the product.(4) If there is something extra good about the government collection more revenue, then the tariff can be good for the country.(5) If there is desirable to enhance the incomes of factors used intensively in the import-competing industry, then a tariff can be good for the country.n S

7、ome policy conclusion previewed at the start of chapter 7:There are valid “second-best( 次 优 )” arguments for protection-situations in which protection could be better than free trade.Some other government policies（政府政策） are usually better than import barriers（进口壁垒） in these situations.Content（内容）n （

8、1）The ideal world of first best（最优）n （2）The realistic world of second best （次优）n （3）Promoting domestic production or employmentn （4）The infant industry argument：幼稚产业理论n （5）The dying industry argument（夕阳产业理论） and adjustment assistancen （6）The developing government argumentn （7）Other arguments for pro

9、tection: non-economic objectivesn （8）The politics of protectionThe ideal world of first best 最优n In a first-best world free trade is economically efficient. Free trade allows the “invisible hand（看不见的手）” of market competition to reach globally.P=MB=SMB=MC=SMCPrivate producers, reacting to the signal

10、of the market price, expanding production in each country to levels that are as good as possible for the world as whole.Private consumers, also reacting to price signals, expand their purchases of products to levels that market the whole world as well off as possible.The realistic world of second be

11、st（次优）n Private actions will not lead to the best possible outcomes for society.n The first two types of distortions in the figure are externalities（外部性） or spillover effects（挤出效应）.The first example of an externality is the classic case of river pollution.Second example: jobs in a certain import- co

12、mpeting sector generate greater returns for society than are perceived by the people who decide whether or not to take the jobs.In the absence of any other distortion, a government subsidy（政府补贴） creates a distortion by artificially lowering the price to buyers.A subsidy is like a negative task.Gover

13、nment policies towardexternalitiesn How should a society try to fix distortions（扭曲）caused by externalities?n The optimistic approach is the tax-or-subsidy approach(税收-补贴方法) developed by British economist A.C.Pigou.n The other approach is the property-rights（产权）approach by Ronal Coase.n Private-prope

14、rty institution:私有产权制度tax-or-subsidy approach(税收-补贴方法)n 1 SMCMC=P=MB=SMB: the government should levy a tax of (SMC-SMB) to bring everything into equality by raising the price to match the full social marginal cost.n 2 SMBMB=P=MC=SMC: let the government pay a subsidy of (SMB-SMC) so that decision mak

15、ers in the marketplace recognize the full social returns.Promoting domestic production oremployment（1） Local production of this product produces spillover benefits because other firms and industries benefit from production know-how or management techniques introduced by the firms in this industry.（2

16、） Employment in this industry imparts new worker skills and attitudes, and some workers carry these when they switch jobs to work for other firms and industries.n （3）By producing now at high cost, firms in the industry can find ways to lower their costs over time.n （4）There are extra costs（额外成本） to

17、workers if they are forced to switch to jobs in other industries.n （5）The country and its citizens take pride from producing this product locally.n （6）The production is essential to national defense.n （7）Employment in the industry is a way to redistribute income to poor or disadvantaged members of s

18、ociety.Theinfant industry argument（幼稚产业理论）n A temporary tariff is justified because it cuts down on imports while the infant domestic industry learns how to produce at low enough costs.n Eventually the domestic industry will be able to compete without the help of a tariff.It differs from the optimal

19、 tariff argument（最优关税理论）The protection is needed only for a while.The infant industry argument -Alexander hamilton used in his report on manufactures in 1792.Japan : protect its steel, automobile, shipbuilding , and electronics industries before they because tough competitors and the important barri

20、ers were removed.How it is supposed to work?A. The Domestic Market, NowB. The Domestic Market in the FuturePriceSdfSdn4,000World pricedb3,0003,000VDdQuantityn How well it works in practice? 3 questions to ask:n （1） Is any government policy really needed?n （2） If the government is going to provide as

21、sistance, what government policy is best?n （3） Will the infant industry really grow up?1 Is any government policy really needed?The standard solution is for the firm to obtain private financing, using personal wealth , borrowing from relatives and friends, bank loans , venture capital, and so forth.

22、If private financing is available, there is nothing left for the government to do.Reason for Government assistancen Distortions(扭曲) of the type:(1) There are imperfections in the financial markets.(2) The benefits from the early business investments do not accrue to the firms making these early inve

23、stments.n (1) There are imperfections in the financial markets.Financial institutions like banks（市场） and stock markets(资本市场) may be undeveloped or unwilling to take on certain kinds of risk.(2) The benefits from the early business investments do not accrue to the firms making these early investments

24、.Infant firms must spend a lot of money to learn about the product and the production process, to train workers, and to master the marketing of the product. They will not be able to earn profits on these early investments if follower firms can enter the industry later and imitate(模仿) products and pr

25、oduction technology, hire away experienced workers, and copy marketing practices.Competition from follower firms then means that the early firm do not earn much in the way of future profits. But is they probably will not earn future profits that can be used to pay back the loans, prudent lenders wil

26、l not finance their early investments.The early firms: create positive externalities（正的外部性） for the follower firms rather than future profits for themselves.In the face of this distortion, there could be a positive role for the government to provide assistance to the infant industry.What government

27、policy is best?If the goal is to induce early production even when the early firms are not cost-competitive by world standards, a production subsidy is better than a tariff or other import barrier.If the problem is imperfections in financial markets and institutions, the government should offer loan

28、s（提供贷款） to the infant firms.If the problem is that the early firms train workers who then leave and take their new skills to other firms, the government should offer a subsidy（提供补贴） to defray some of the training costs.Will the infant industry really grow up?If the tariff is truly temporary, then fi

29、rms have a powerful incentive to grow up. But the pressure is much less if the firms expect that they can ask for more time with the tariff because childhood is longer than they planned for.There is a danger that the industry remains high-cost behind the protection of the tariff for a long time.This

30、 is probably another reason to favor a subsidy.Cases for infant industry protectionn Successful cases:Computerssemiconductors in JapanAirbus in Europe（government provided subsidies and loans, not import protection.）n Failed cases:Personal computers in Brazilian in 1980s. (The government shut its mar

31、ket to foreign-made personal markets, hoping to foster local producers.)How valid is the infant industry argument?Four conclusions:（1） There can be a case for some sort of government encouragement.（2） A tariff may or may not be good.（3） Some form of government help other than a tariff is a better in

32、fant industry policy than a tariff.（4） It is hard for government to know which industries to support, because it is difficult to predict which industries can reduce their costs enough in the future to create net national benefits.The dying industry （夕阳产业）argument and adjustment assistancen Should th

33、e firms be allowed to shrink, perhaps go out of business, or should they be protected?Trade adjustment assistance（贸易调整援助）n Government in a number of developed countries offer trade adjustment assistance to workers and firms in import-threatened industries.Free trade opponents（对手） of trade adjustment

34、 assistance also argue that this assistance creates perverse incentives（激励）. It encourage people to change their behavior for the worse.1 firms and workers are encouraged to gamble on entering or staying in import- vulnerable industries（进口弱势产业） because they know that extra relief（额外救济） will be given

35、 if things work out badly.n 2 workers are encouraged to remain unemployed for longer periods of time because they can receive unemployment compensation(失业补偿) for a longer time.The developing government argumentn For a developing nation with low living standards , the most serious “domestic distortio

36、n” may relate to the governments inability to provide an adequate supply of public goods.n Case in MaritaniaThe developing government argumentn Import tariffs can be justified by another second-best argument relating to conditions in less developed countries .n In a poor nation, the tariff as a sour

37、ce of revenue may be beneficial and even better than any feasible alternative policy, both for the nation and for the world as a whole.The developing government argumentn The developing government argument states that in poor developing nations the import tariff (进口关税) becomes a crucial source, not

38、of industrial protection but of government revenue.Other arguments for protection: non-economic objectives（非经济目标）Three other goals:(1) National pride(2) National defense：国防(3) Income redistribution：收入重新分配To achieve the non-economic objective with the least economic cost to the nation, use a policy that acts as directly as possible on the specific objective.National prideAs long as the pride can be generated only by something collective （ 集 体 ）and nation wide, something not purchased by individuals in the marketplace, there is a case for policy intervention.If the pri