STRATEGIC TRADE POLICY ARGUMENT Let

STRATEGIC TRADE POLICY ARGUMENT
Let's now turn to the discussion on the strategic trade argument for protection. Some markets may be characterized by imperfect competition so that there are only a few big players and excess profits are made
Some markets are characterized by imperfect competition. It may occur that because of high fixed costs, only a few companies can survive in a market and these companies are able to realize above normal profits. Countries may decide to enter in competition to try to capture these excessive profits. Let's take, for example, the case of the air transport industry. It might be the case that, on specific routes, only one company can 16 survive: If two companies (a domestic and a foreign company, for example) were in the market, they would both realize losses; but if one company survives, it will realize monopolistic profits.
A subsidy by government to a domestic firm can deter foreign company and raise the profits of the domestic company by more than the subsidy
In these circumstances if the government of one country provides its domestic air transport company with a sufficiently large subsidy, it may create for the company the incentive to enter in the market independently of whether the foreign company enters or not in the market. On the other hand, the foreign air-transport company, facing the competition of a subsidised company, will decide not to enter in the market, because if it did, it would certainly realize losses. In the end, only the subsidized company will stay in the market, and it will realize monopolistic profits. To the extent that these profits are higher than the subsidy paid by the government, the overall welfare of the country that has subsidized its domestic industry will increase.
Is this policy desirable?
At first sight, it might look quite a good idea, under these circumstances, to protect the domestic industry and capture foreign profits. However, the desirability of such a policy depends on a number of specific conditions. Firstly, it is necessary that the subsidy is sufficiently large to actually deter the foreign firm from entering in the market. If it didn't and both companies entered in the market, then the profits captured by the domestic firm may not cover the cost of the subsidy and the country as a whole will be worse off. In addition, a strategic trade policy is a beggar-thy-neighbour policy, because it is based on the assumption of capturing foreign profits. As a consequence, strategic trade policy is subject to retaliation and therefore entails the risk of a trade war that might leave everybody worse off.
OTHER ARGUMENT FOR PROTECTION
Fiscal revenue argument
Among other arguments for protection, there is that of fiscal revenue. In many countries, especially developing countries, income taxes are difficult to collect, while tariffs are easier to collect: imported goods have to cross a border and therefore it is more difficult to hide them. Countries, especially developing countries, have often used this argument to keep their tariffs high. There is evidence, however, that in many countries the simplification of the tax and tariff systems has led to an increase in the overall fiscal revenue, even when accompanied by a reduction in the average tariff rate. This is because a simplified system is easier to control, people understand it better and therefore it is less prone to evasion.
Income distribution
Finally, some countries have used protection as an instrument to redistribute income. We have said that liberalization redistributes incomes. Trade liberalization increases the returns of the relatively abundant factor and reduces the returns of the scarce factor. Maintaining protection is therefore a way to avoid these adjustments. This is obviously true. However, trade policy is not the only instrument to achieve redistributive goals. And economists argue that it is more efficient to use fiscal policies than trade policy to achieve income redistribution targets.

Результаты (русский) 1:

СТРАТЕГИЧЕСКАЯ ТОРГОВАЯ ПОЛИТИКА АРГУМЕНТ Теперь обратимся к обсуждению стратегических торговых аргументом для защиты. Некоторые рынки могут характеризоваться несовершенной конкуренции так, что есть только несколько крупных игроков, и сверхприбыли сделаны Некоторые рынки характеризуются несовершенной конкуренции. Это может произойти, что из-за высокие фиксированные издержки, лишь немногие компании могут выжить на рынке, и эти компании имеют возможность реализовать выше нормальной прибыли. Страны могут решить вступить в конкурсе, чтобы попытаться захватить эти сверхприбыли. Возьмем, к примеру, в случае авиатранспортной отрасли. Это может быть случай, что, на конкретных маршрутах, только одна компания может 16 выжить: Если две компании (внутренние и иностранные компании, например) на рынке, они оба будут понимают потери; но если одна компания выживает, он будет понимать монополистическую прибыль. Субсидии правительства к отечественной компании могут сдерживать иностранные компании и повышения прибыли отечественной компании более чем субсидии In these circumstances if the government of one country provides its domestic air transport company with a sufficiently large subsidy, it may create for the company the incentive to enter in the market independently of whether the foreign company enters or not in the market. On the other hand, the foreign air-transport company, facing the competition of a subsidised company, will decide not to enter in the market, because if it did, it would certainly realize losses. In the end, only the subsidized company will stay in the market, and it will realize monopolistic profits. To the extent that these profits are higher than the subsidy paid by the government, the overall welfare of the country that has subsidized its domestic industry will increase. Is this policy desirable? At first sight, it might look quite a good idea, under these circumstances, to protect the domestic industry and capture foreign profits. However, the desirability of such a policy depends on a number of specific conditions. Firstly, it is necessary that the subsidy is sufficiently large to actually deter the foreign firm from entering in the market. If it didn't and both companies entered in the market, then the profits captured by the domestic firm may not cover the cost of the subsidy and the country as a whole will be worse off. In addition, a strategic trade policy is a beggar-thy-neighbour policy, because it is based on the assumption of capturing foreign profits. As a consequence, strategic trade policy is subject to retaliation and therefore entails the risk of a trade war that might leave everybody worse off. OTHER ARGUMENT FOR PROTECTION Fiscal revenue argument Among other arguments for protection, there is that of fiscal revenue. In many countries, especially developing countries, income taxes are difficult to collect, while tariffs are easier to collect: imported goods have to cross a border and therefore it is more difficult to hide them. Countries, especially developing countries, have often used this argument to keep their tariffs high. There is evidence, however, that in many countries the simplification of the tax and tariff systems has led to an increase in the overall fiscal revenue, even when accompanied by a reduction in the average tariff rate. This is because a simplified system is easier to control, people understand it better and therefore it is less prone to evasion. Income distribution Finally, some countries have used protection as an instrument to redistribute income. We have said that liberalization redistributes incomes. Trade liberalization increases the returns of the relatively abundant factor and reduces the returns of the scarce factor. Maintaining protection is therefore a way to avoid these adjustments. This is obviously true. However, trade policy is not the only instrument to achieve redistributive goals. And economists argue that it is more efficient to use fiscal policies than trade policy to achieve income redistribution targets.

Результаты (русский) 3:

Стратегической политики в области торговли аргумент
давайте теперь перейти к обсуждению стратегических торговых аргумент для защиты. Некоторые рынки может быть несовершенной конкуренции, с тем, что лишь несколько крупных игроков и излишек прибыли,
некоторые рынки характеризуются несовершенной конкуренции. Может случиться так, что из-за высокого фиксированные расходы,Лишь немногие компании могут выжить в условиях рынка и эти компании имеют возможность реализовать выше нормы прибыли. Страны может принять решение о введите в конкуренции в попытке захвата этих чрезмерной прибыли. Рассмотрим, например, случай с воздушного транспорта. Может быть в этом случае, на конкретных маршрутов, только одной компании могут 16 выжить: Если две компании (внутренних и иностранных компаний,Например) были на рынке, они будут как реализовать потерь; но если одна компания выживает, она поймет монопольной прибыли.
субсидии со стороны правительства для внутренней фирма может сдерживать иностранной компании, и поднять прибыль отечественных компаний более чем на субсидии