📖 国际贸易复习

Economics

I. Lesson Focus

This review lesson consolidates the core concepts of international trade, comparative advantage, gains from trade, and the welfare effects of trade barriers. Candidates must be able to determine which country has a comparative advantage, calculate opportunity costs, analyze the impact of tariffs and quotas on consumer surplus, producer surplus, government revenue, quota rents, and deadweight loss, and distinguish between small-country and large-country effects.

II. The Problem

China, as one of the world’s largest trading nations, frequently encounters trade wars and tariff adjustments. For example, when one country imposed a 100% tariff on imported electric vehicles in 2023, Chinese exporters saw profits decline, domestic consumers paid higher prices, domestic producers gained protection, but overall economic welfare suffered. We need to master how to use comparative advantage theory to determine trade patterns and employ supply-and-demand models to quantify the effects of tariffs, quotas, and voluntary export restraints on consumer surplus, producer surplus, government revenue, and deadweight loss. This enables accurate calculation of net welfare changes and evaluation of policy outcomes in CFA exams.

III. Comparative Advantage and Gains from Trade

Comparative advantage exists when a country can produce a good at a lower opportunity cost than another country. Even if one country holds an absolute advantage in both goods, mutually beneficial trade is still possible as long as opportunity costs differ.

Absolute advantage refers to the ability to produce more of a good with fewer resources.
Comparative advantage is determined by the lower opportunity cost.

Gains from trade occur when: - The consumption possibility frontier expands outward for both countries. - Both nations can consume combinations beyond their domestic production possibility frontiers. - The terms of trade lie between the two countries’ domestic opportunity cost ratios.

Ricardian model core relationship:
Opportunity cost = quantity of the other good forgone / quantity of the good obtained.

IV. Protectionism and Trade Barriers

Governments use tariffs, quotas, voluntary export restraints (VERs), and subsidies to protect domestic industries.

Effects of a tariff (small-country assumption): - Domestic price rises to world price + tariff. - Domestic production increases, consumption decreases, and imports fall. - Consumer surplus declines. - Producer surplus rises. - Government collects tariff revenue. - Deadweight loss (DWL) is created.

Effects of a quota: - Limits the quantity of imports. - Raises domestic price to the quota-constrained equilibrium. - Generates quota rents, which may accrue to importers or foreign exporters. - Also creates deadweight loss, typically larger than that of an equivalent tariff because there is no automatic government revenue unless licenses are auctioned.

Voluntary export restraint (VER): The exporting country “voluntarily” limits exports; rents usually accrue to foreign producers, causing greater welfare loss to the importing country than a standard quota.

V. Economic Analysis Framework for Trade Policy

Use domestic supply and demand curves:

1. Under free trade, domestic price equals the world price (Pw).
2. After an ad-valorem tariff t, domestic price = Pw × (1 + t).
3. Imports = domestic quantity demanded – domestic quantity supplied.

Welfare change calculations: - ΔCS = –(a + b + c + d) - ΔPS = +a - Government revenue = +c (tariff) or quota rent - Net welfare effect (small country) = –(b + d) = deadweight loss

Here, a = gain in producer surplus, b = production DWL, c = tariff revenue or rent, d = consumption DWL.

Worked Cases

Case 1: Comparative Advantage and Trade Direction

The United States can produce 6 units of wheat or 4 units of cloth per unit of labor. China can produce 3 units of wheat or 5 units of cloth per unit of labor.

Opportunity costs: - United States: 1 wheat costs 4/6 ≈ 0.67 cloth; 1 cloth costs 6/4 = 1.5 wheat. - China: 1 wheat costs 5/3 ≈ 1.67 cloth; 1 cloth costs 3/5 = 0.6 wheat.

Conclusion: The United States has a comparative advantage in wheat (0.67 < 1.67), while China has a comparative advantage in cloth (0.6 < 1.5). The United States should specialize in and export wheat; China should specialize in and export cloth. Both benefit as long as the terms of trade lie between 0.67 and 1.67 cloth per wheat.

Case 2: Tariff Economic Effects (Small Country)

A small country faces a world car price Pw = $15,000. Domestic demand: Qd = 800 – 0.02P. Domestic supply: Qs = 100 + 0.01P.

Free trade: - Price = $15,000 - Qd = 500 cars, Qs = 250 cars, imports = 250 cars

With a $4,000 specific tariff, domestic price = $19,000: - New Qd = 420 cars - New Qs = 290 cars - Imports = 130 cars - Change in consumer surplus = –$1,950,000 - Change in producer surplus = +$650,000 - Government revenue = 130 × $4,000 = $520,000 - Deadweight loss (b + d) = $180,000

Net national welfare declines by the deadweight loss of $180,000.

Case 3: Quota versus Tariff Equivalence

Using the same market as Case 2, the government imposes an import quota of 130 cars. The domestic price rises to $19,000 (identical price effect as the tariff).

Key distinction: - Under the tariff, the government receives $520,000 in revenue. - Under the quota, if licenses are auctioned, the government captures the rent; if given free to domestic importers, importers receive the rent; under a VER, foreign exporters typically capture the rent. - Consequently, the importing country’s net welfare loss is usually larger under a quota or VER than under an equivalent tariff.

Traps

Key Formulas

• Opportunity cost = quantity of other good forgone / quantity obtained
• Terms of trade must satisfy: OC₁ < TOT < OC₂
• Post-tariff domestic price = Pw × (1 + t)
• Imports = Qd(P) – Qs(P)
• ΔCS = –(a + b + c + d)
• ΔPS = +a
• Tariff revenue = import quantity × unit tariff
• Small-country net welfare = –(b + d) = deadweight loss
• Quota rent = (domestic price – world price) × quota quantity

Practice Questions

Q1. According to comparative advantage theory, if Country A’s opportunity cost of producing one unit of X is 2 units of Y and Country B’s is 3 units of Y, then:
A. A should export Y
B. A has a comparative advantage in X
C. B has a comparative advantage in X
D. Neither country has a comparative advantage

Q2. After a small country imposes a tariff, the most likely outcome is:
A. Consumer surplus increases and producer surplus decreases
B. Government revenue is collected and net welfare is positive
C. Both production and consumption deadweight losses occur
D. Domestic production decreases

Q3. Compared with an equivalent tariff, an import quota usually causes a larger net welfare loss for the importing country because:
A. There is no deadweight loss
B. The effects are identical
C. Rents may be captured by foreign producers
D. The loss cannot be compared

Q4. Which of the following is NOT a direct economic consequence of imposing a tariff (small country)?
A. Rise in domestic price
B. Reduction in imports
C. Increase in producer surplus
D. Rise in world price

Q5. If the U.S. opportunity cost is 1 computer = 0.5 cars and Japan’s is 1 computer = 2 cars, the acceptable terms-of-trade range is:
A. 0.5–2 cars per computer
B. 0–0.5 cars per computer
C. 2–4 cars per computer
D. Any ratio is acceptable

Q6. The primary difference between a voluntary export restraint (VER) and an import quota is that:
A. Rents under a VER usually accrue to exporters
B. A VER creates no deadweight loss
C. A VER lowers domestic prices
D. A VER is a form of tariff

Q7. The most important difference between a tariff imposed by a large country versus a small country is that the large country:
A. May improve its terms of trade
B. Always has smaller deadweight loss
C. Does not experience a decline in consumer surplus
D. Cannot collect government revenue

Q8. If a tariff is prohibitive:
A. Government revenue is maximized
B. Imports fall to zero
C. Deadweight loss is zero
D. Producer surplus declines

Answers

Takeaways

• Comparative advantage is based on opportunity cost, not absolute productivity.
• Trade expands both countries’ consumption possibility frontiers whenever opportunity costs differ.
• A small-country tariff always produces a net welfare loss equal to deadweight loss (b + d).
• Quotas and tariffs have identical price effects, but the distribution of rents differs.
• VERs typically inflict greater welfare damage on the importing country than ordinary quotas.
• Large countries may improve their terms of trade through tariffs, potentially creating an optimal tariff.