Problem Set 100-3




1. Consider each of the following imperfect market situations. From the following list of policy options, identify all types of trade policy AND all types of domestic policy that could potentially raise national welfare in the presence of each imperfection. Consider only the partial equilibrium effects of each policy.

Options: An import tariff, an import quota, a VER, an export tax, an export subsidy, a production tax, a production subsidy, a consumption tax, a consumption subsidy.


Trade Policy Domestic Policy
A. A large country that imports steel    
B. A small country in which the import-competing industry generates a positive externality    
C. Unemployment in a small import-competing industry suffering from a surge of imports    
D. A small country in which the export industry generates a negative externality    
E. A small country in which an export decline causes unemployment    

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Last Updated on 8/5/00