International Trade and Public Policy

Definition

International trade and public policy refers to the set of rules and regulations established by governments regarding trade between countries. It involves policies related to tariffs, quotas, subsidies, and other measures that impact imports and exports.

Analogy

Think of international trade as a global marketplace where different countries exchange goods like people exchanging items at a flea market. Public policy acts as guidelines that determine what can be traded freely and what restrictions are placed on certain items.

Related terms

Tariffs: Taxes imposed on imported goods by governments which increase their prices and make them less competitive compared to domestic products.

Quotas: Limits set by governments on the quantity of certain goods that can be imported/exported during a specified period.

Comparative Advantage: The ability of one country (or individual) to produce a good/service at a lower opportunity cost than another country (or individual).