4.1 - Protectionism Flashcards
What are the 4 main forms of protectionism?
Tariffs
Quotas
Subsidies
Govt. Action
What is the purpose of a tariff?
Import tax
Raise import prices + reduce demand
Rising tax revenue
Switch to domestic goods
What is the purpose of a quota?
Quantitative trade limit
Physical action
Larger market share for domestic firms
What is the purpose of a subsidy?
Local market protection
Govt. give money to domestic firms
Artificially lowers prices
Competition intensifies
What are the 3 main examples of govt. action?
Legislation
Exchange Control
Preferential State Procurement Policies
Which forms of legislation can act as protectionism?
Product quality controls
Environmental restrictions
How does exchange control act as a form of protectionism?
Limits foreign exchange
Govt. prevents purchase/sale of currency
How does preferential state procurement policy act as a form of protectionism?
Govt. able to favour domestic firms
What is an embargo?
Total ban on imported goods
What is import licensing?
Govt. grants importers license to import goods
