BA 3340 Lecture Notes - Lecture 9: Double-Entry Bookkeeping System, Paul Samuelson, New Trade Theory
Document Summary
Situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country. Trade theory shows why it is beneficial for a country to engage in international trade even for products it is able to produce for itself. To specialize in the manufacture and export of products and services that it can produce efficiently. Import products and services that can be produced more efficiently in other countries: limits on imports may be beneficial to producers, but not beneficial for consumers. Suggests that it is in a country"s best interest to maintain a trade surplus -to export more than it imports. Mercantilism views trade as a zero-sum game - one in which a gain by one country results in a loss by another.
