托马斯.A.普格尔_国际贸易_英语chap010.ppt

Chapter 10 Arguments for and against Protection Outlines of chapter 10 Incentive distortions and their effects The specificity rule Argument for protection The politics of protection Incentive distortions and their effects The first-best world Private marginal cost = social marginal cost Figure 10.1 – Incentive Distortions and Their Effects The second-best arguments The second-best world The reality that the economy includes distortions that cause the economy to fall short of full economic efficiency. The distortions are the result of private market failures or distortionary government policies Incentive distortions Externalities Externalities net direct effects of market activity to parties other than those agreeing to buy and sell in the marketplace spillover effects Government policies toward externalities Tax-or-subsidy approach Levy a tax when social marginal cost exceeds private cost Pay a subsidy when social marginal benefit exceeds private benefit Property-rights approach The specific rule To address the inefficiency caused by a distortion (such as that caused by an externality), it is usually more efficient to use the government policy tool that acts as directly as possible on the source of the distortion separating private and social benefits or costs. Similarly, to achieve a noneconomic objective at the least economic cost, it is usually better (lower cost) to use the government policy that acts as directly as possible on the specific objective. (In short, for both versions, identify the problem or issue precisely and intervene with policy as directly as possible.) Specificity Rule If an externality is present, government policy should intervene as directly as possible on the specific source of the externality, to most enhance national economic efficiency. If a country has some other objective, government policy should intervene as directly as possible on the specific objective, to minimize the national economic cost of achieving the other object