20.07.2023 Controversies#

Activist Trade Policy#

Pro:

  • market failrues keep industry low

  • approbiality problem (free rider on innovation)

    • innovation is public good

  • imperfect competition = excess prozit

    • activist trade policy = shift profits home

    • example: Boeing Arbus

Cons:

  • subsidizing one industry difficult

  • Research is broadly subsizied already

  • trade war

  • rent seeking

Low Wage Labor#

Trade can hurt low wage labourers in industrialized countries

  • Heckscher Ohlin predigst this

  • but unskilled labor in Mexico gains