Trade Protectionism: Reasons and Impacts
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Questions and Answers

In the context of trade policy outcomes, what model focuses on protection for sale?

  • Median voter model
  • Lobbying model
  • Protection for sale model (correct)
  • Protectionist model
  • According to Fernandez and Rodrik (1991), why do countries tend to have an anti-trade bias?

  • Due to uncertainty about trade consequences (correct)
  • To promote international cooperation
  • Because voters prefer competition
  • Because of excessive imports
  • What do Dhingra (2014) findings add to the discussion about the Median Voter Model?

  • They show import subsidies are beneficial
  • They support decreasing protectionism
  • They explain the lack of import subsidies (correct)
  • They suggest increasing tariffs on exports
  • Why do democracies not perfectly fit the assumptions of the Protection for Sale model according to Grossman and Helpman (1994)?

    <p>They assume a perfect and direct democracy</p> Signup and view all the answers

    What characteristic of congressional districts is considered in Baldwin and Magee's (1998) study on trade negotiations?

    <p>Worker demographics</p> Signup and view all the answers

    Which concept suggests that some industries should receive domestic subsidies due to generating positive externalities?

    <p>Domestic market failure</p> Signup and view all the answers

    How does the Median Voter Theorem predict policies when established by majority vote?

    <p>Based on utility of median voter</p> Signup and view all the answers

    What is the main implication of lobbying in the Protection for Sale model according to Grossman and Helpman?

    <p>Leads to diluted gains from trade</p> Signup and view all the answers

    In what way does Economic and geographic concentration help interest groups overcome costs of collective action?

    <p>It makes it easier to monitor free riding behavior</p> Signup and view all the answers

    Why might some industries vanish due to free trade, according to Grossman and Helpman's argument?

    <p>Losses from trade are concentrated in these industries</p> Signup and view all the answers

    What is one of the reasons that can explain trade liberalization from 1990 to 2016?

    <p>Juggernaut effect</p> Signup and view all the answers

    Why do exporters become more powerful relative to import-competing producers as tariffs decline abroad?

    <p>Reciprocity principle</p> Signup and view all the answers

    What effect does unilateral liberalization have on joining global value chains?

    <p>Increased specialization</p> Signup and view all the answers

    Which theory suggests that left-out countries are incentivized to sign Free Trade Agreements (FTAs)?

    <p>Domino theory</p> Signup and view all the answers

    Why do countries lower tariffs unilaterally according to the text?

    <p>To join global value chains and specialize</p> Signup and view all the answers

    How does the reciprocity principle impact exporters' lobbying efforts?

    <p>Strengthens their lobbying power</p> Signup and view all the answers

    Which factor contributes to exporters' increased power when tariffs decline abroad?

    <p>Reciprocity principle</p> Signup and view all the answers

    What does the Juggernaut effect imply for exporters lobbying for free trade agreements?

    <p>Increased power relative to importers</p> Signup and view all the answers

    What motivates countries to sign Free Trade Agreements according to the Domino theory?

    <p>Fear of loss to other countries benefiting from FTAs</p> Signup and view all the answers

    What benefit does unilateral liberalization offer in terms of specialization?

    <p>Increases specialization opportunities</p> Signup and view all the answers

    What is a key reason why trade protectionism is appealing to some?

    <p>It benefits specific groups like consumers and owners of abundant factors</p> Signup and view all the answers

    How did import restrictions on sugar in 1998 affect US sugar industry profits?

    <p>Profits increased by about 1 billion, with half going to only 17 sugarcane farms</p> Signup and view all the answers

    What was the estimated annual cost to US consumers due to the wire hanger antidumping duties in 2008?

    <p>$120 million</p> Signup and view all the answers

    Why did the US Department of Commerce impose antidumping duties on wire clothes hangers from China in 2008?

    <p>Due to a petition by M&amp;B Products Co. from Alabama</p> Signup and view all the answers

    Who benefited the most from import restrictions on sugar in 1998?

    <p>17 sugarcane farms receiving almost half the gain</p> Signup and view all the answers

    Which group among the following was NOT identified as a loser due to trade protectionism in the text?

    <p>17 sugarcane farms</p> Signup and view all the answers

    How did Olson's asymmetry contribute to the appeal of trade protectionism?

    <p>' By showing that gains are dispersed while losses are concentrated'</p> Signup and view all the answers

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