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1、TRADEANDAGRICULTUREThebasicpointofthissubjectistolookattheforcesthathaveledtoU.S.andforeignagriculturaltradepoliciestodeterminewhythesepoliciesarestrangeandconfusing,andwhattheirconsequencesare.WhyTradeBarriers?Thereareanumberofpointsabouttradebarriersthatwewanttolooka
2、t:·Whyareoveralltradebarriershigherthanworldwelfarewarrants?·Whyaretariffsandothertradebarriershigherforfinishedconsumergoodsthanforrawmaterialsandintermediategoods?·Whydonationsactlikeloweringtradebarriersisaconcessionwhenthenationloweringitsbarriersisgainingaswellast
3、heexportingnation?·Whyarebarrierstotraderaisedmoreofteninrecessionsthaninperiodsofeconomicprosperity?·Whyarebarrierstotradeoftenincreasedsubstantiallywhenimportsincreasesuddenly?Theanswerstotheabovequestionshavealottodowithpolitics–specificallywiththepoliticsoftradelob
4、bying.Gainsv.LossesWinningatariffbattlewithinacountrydependsuponthefollowingfactors:·Howgreatisthelossfromthetariff?Ifthelossissmall,resistancetothetariffwillbesmall,andviceversa.·Howmanypeoplewillgainfromthetariff?Themorepeoplegain,thelargerthegroupfightingforthetarif
5、f,thelesscohesionthegrouphasandthemorepoorlyitfights.·Howmuchsympathywillthosewhoadvocatethetariffreceivefromthosewhowillbehurtbyit?·Howstrongistherepresentationingovernmentofthosewhowantthetariffversusthosewhoareopposed?Ingeneral,ifthegainsfromprotection,dividedbythen
6、umberofpeoplewhostandtogain,aregreaterthanthecosts(forthosepeople)ofachievingprotection,thenprotectionistswillfightforprotection.Consumers,ontheotherhand,tendtofighttariffsiftheamountofconsumergain,dividedbythenumberofconsumers,isgreaterthanthecostsofgettinginvolved.We
7、knowthatmostpeople,iftheycouldvotefororagainstprotection,wouldbeagainstprotection.Yetwehavemanyprotectionistmeasures.Therefore,tradepolicyoutcomesdepartfromwhatamajorityvotewouldtellusshouldhappen.Why?Theanswer,inpart,comesfromgroupsize.Protectionistsusuallyaresmallgro
8、ups,wheretheaveragegainforeachmemberofthegroupisquitelarge.Consumerbenefits,ontheotherhand,4fromopposingprotectionare
