Elaborate on the alternative New Trade Theories. Please explain each of them and specifically indicate the main contributions to the understanding of the explanation of trade flows. Hint: make sure to discuss the issues of First Mover Advantage, Location Specific Advantage, Economies of Scale, and Imperfect Competition.

Elaborate on the alternative New Trade Theories. Please explain each of them and specifically indicate the main contributions to the understanding of the explanation of trade flows. Hint: make sure to discuss the issues of First Mover Advantage, Location Specific Advantage, Economies of Scale, and Imperfect Competition.

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter18: International Trade And Finance

Section: Chapter Questions

Problem 3SQP

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10. major features of the linder theory of trade are that it focuses on _______ patterns in countries and also introduces, in contrast to traditional trade theories, the general concept of _______ trade a. demand; intra-industry b. demand; inter industry c. supply; intra industry d. supply; inter industry
Suppose a capital abundant country, such as Canada, enters into free trade with a natural resource rich country, such as India.I. Explain the form of trade, such as, who exports what and imports what, using the concept of comparative advantage in trade theory. Identify each country’s comparative advantage and disadvantage.II. Explain how trade creates winners and losers within each country?Note: You may/may not draw relevant diagrams to answer the above questions.
Define the differences between the classical, country-based trade theories and the modern, firm-based trade theories. If you were a manager for a large manufacturing company charged with developing your firm’s global strategy, how would you use these theories in your analysis? Which theories seem most appealing to you and which don’t seem to apply?
Explain the difference between Country based trade theories and Industry based Trade Theories. Illustrate your answer with examples of both types of theories.
Given the information as follows: Consider the following model of trade between Vietnam and France. Assume throughout that those two countries are the only two countries in the world, at least for purposes of trade. There are two goods: Rice and Beef. Consumers always spend 1/4 of their income on rice and the remainder on beef. The only factor of production is labor. Each Vietnamese worker can produce 2 unit of Rice or 1 unit of beef per unit of time, while each French worker can produce 1 units of rice or 3 units of beef per unit of time. There are 100 million workers in Vietnam and 70 million in France. a. Determine the product brings higher wealth to each country. b. Determine the pattern of trade for both countries using Ricardian model. Draw the world relative supply curve. c. What is the benefit of each country when joining international trade following Ricardian model? Draw the graph to clarify your idea.
Which of the following is some evidence we discussed in lecture that trade affects firms of different productivities differently? A) high cost firms were most likely to begin selling goods from Canada to the US when the two countries signed a trade agreement. B) Countries with smaller firms were less likely to gain from trade C) low productivity firms faced with Chinese import competition were more likely to shrink and shut down compared with higher productivity firms
Suppose Big Country can produce 80 units of X by using all its resources to produce X or 60 units of Y by devoting all its resources to Y. Comparable figures for Small Nation are 60 units of X and 60 units of Y. Assuming constant costs, in which product should each nation specialize? Explain why. What are the limits of the terms of trade between these two countries? How would rising costs (rather than constant costs) affect the extent of specialization and trade between these two countries?
a) It is sometimes argued that, if a government protects a domestic industry (for example, using tariffs or subsidies) that is facing import competition from a more efficient foreign industry, this would be a net gain for the country as a whole, even if the foreign industry is itself protected. Give arguments for and against this point of view, drawing on Ricardo’s theory of trade, the Standard Model, and other theory that you consider relevant. Finally, does the size of the country matter?
a) It is sometimes argued that, if a government protects a domestic industry (for example, using tariffs or subsidies) that is facing import competition from a more efficient foreign industry, this would be a net gain for the country as a whole, even if the foreign industry is itself protected. Give arguments for and against this pointof view, drawing on Ricardo’s theory of trade, the Standard Model, and other theory that you consider relevant. Finally, does the size of the country matter?
It is important to consider multiple perspectives on this issue. From an economic standpoint, proponents of free trade argue that competition, even if it comes from low-wage countries, can benefit consumers by providing access to cheaper goods and a wider variety of products. This can lead to increased purchasing power and a higher standard of living for consumers. In terms of the interests of the people represented by unions, their primary concern is often job protection and ensuring favorable working conditions. Unions may believe that restricting imports or advocating for trade barriers is necessary to safeguard jobs and maintain higher wages for their members. They may argue that protecting domestic industries from foreign competition is crucial for preserving employment opportunities and supporting local economies. Assessing the best interests of the people and the country as a whole is subjective and can vary depending on various factors such as the specific industry, the overall…
Given the arguments relating to the new trade theory and strategic trade policy, what kind of trade policy should business be pressuring government to adopt?
A free-trade equilibrium exists in which United States exports Food and imports clothing from China. The goods are produced with two factors: capital and labour. The trade pattern is the one predicted by the H-O theory. a. Show standard trade model graphically and explain the effect on quantities produced, quantities consumed and welfares of free trade in the United States and China respectively.b. Show graphically an increase now occurs in the U.S. endowment of capital, its abundant factor.1. What is the effect on the shape and position of the U.S. production-possibility curve?2. What is the effect on the actual production quantities in the United States if the relative product price is unchanged? Explain.