Free Trade vs Protectionism: What's the Difference?
Protectionism raises or keeps barriers to shield home producers; a barrier can be a tariff or a quota.
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1.What is the difference between free trade and protectionism?
Protectionism raises or keeps barriers to shield home producers; a barrier can be a tariff or a quota.
2.What are a tariff and a quota?
The WTO defines tariffs as charges on imports and quotas as limits on import quantities.
3.A shirt from abroad costs 20 and a 25 percent tariff applies. What does it cost?
A 25 percent tariff adds 5, so the imported shirt costs 25 (worked example).
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Sources (5)
- Ricardo, D.: On the Principles of Political Economy and Taxation, Kap. VII "On Foreign Trade" (Erstausgabe 1817; Text
- WTO: Understanding the WTO - principles of the trading system
- Autor, D., Dorn, D., Hanson, G.: The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade, NBER Working Paper 21906 (January 2016)
- Eigene Rechnung: Hemd 20, Zoll 25 Prozent, Marge kauft, Leo stellt her (Uebungsaufgabe)
- Eigene Rechnung: Rueckruf Folge 294, Ricardo-Opportunitaetskosten 100/120 (Uebungsaufgabe)
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