International Trade Theories 1.1 The Major questions 1.2 The basis for trade 1.3 Limitations of trade theories
International Trade Theories 1.1 The Major questions 1.2 The basis for trade 1.3 Limitations of trade theories
1.1 The Major Questions of International Trade Theories The main questions on which classical and neoclassical theories focus are: Why do countries import and export the sorts of products they make and at what relative prices of terms of trade? How are these trade flows related to the characteristics of a country and how do they affect domestic factor prices? What are the gains from trade and how are they divided among trading countries?
1.1 The Major Questions of International Trade Theories The m ain questions on which classical and neoclassical theories focus are: Why do countrie s import and export t he sorts of products t hey m ake and at what relative prices of terms of trade? How are t hese trade flows related to the characteristics of a country and how do they affect domestic factor prices? What are the gains from trade and how are they divided among trading countries?
1.2 The basis for trade Absolute advantage Comparative advantages, Trade based on monetary costs differences
1.2 The basis for trade Absolute advantage Comparative advantages, Trade based on monetary costs differences
Limitations of trade theories These limitations result from its simple assumption of the model. The key assumption is that the factor of production (land,labor,and capital)are immobile between countries; Another is perfect information exist as to international trade opportunities; Also,the model assumes perfect competition and does not allow monopoly or oligopoly. Probably the most important limitation is that it sees the business enterprises simply as a black boxconverting inputs into outputs and fully described by its production function
Limitations of trade theories These limitations result from its simple assumption of the model. The key assumption is that the factor of production (land, labor, and capital) are immobile between countries; Ano ther is perf e ct info r m a tion e xist a s to international trade opp ortunities; Also, the model assumes perfect competition and does n o t allow m onop oly or oligopoly. Probabl y t he most i mportant limitati o n is that i t sees the business enterprises simpl y a s a black box “con verting inp uts into outputs and fully described b y its production function
市场 进口 国内生产 出口 ≥时间 雁形图