Size of industry The height of economic barriers restricting entry of foreign producers into an industry The exit or adjustment strategies of domestic firms. The last 2 are not often stressed in discussions on protectionism. Five industry cases: Textile and apparel Steel Color televisions Footwear Automobiles. Difference Between Negotiated Protectionism and Tariffs or Auctioned Quotas: Unilateral forms of protectionism attempt to shift the burden of adjustment from an importer to an exporter, while VERs constitute cross-national cartel agreements that seek to allocate market shares between exporters and importers, thereby sharing the benefits and burdens of protectionism. VERs restrict exports from specific countries in specific product categories are generally negotiated on a country-by-country basis. Model: High barriers to entry should produce a relatively stable cartel. Conversely, low barriers to entry should vitiate the effectiveness of a VER because unrestrained foreign producers will immediately begin exporting the US and bid away any economic rents. If low barrier to entry: If protectionism fails to raise profits for a domestic industry, then, ceterus paribus, firms will increase the intensity of their demand for future trade barriers and the U.S. government will generally be sympathetic towards supplying additional protection On the hand, if trade barriers improve an industry's economic health, then firms in that industry will reduce the intensity of their lobbying efforts, and the U.S. government will be less receptive to those pleas. Irony for producers: the more profits domestic firms generate as a result of trade barriers, the most difficult it becomes to justify those restrictions. If high barrier to entry: n short, we expect protection to be temporary in initial round. If firms can exit, protection will not be renewed. In industries with high barriers to exit: if they do not adjust, will lead to renewed proeectionism.
Size of industry The height of economic barriers restricting entry of foreign producers into an industry The exit or adjustment strategies of domestic firms. The last 2 are not often stressed in discussions on protectionism. Five industry cases: Textile and apparel Steel Color televisions Footwear Automobiles. Difference Between Negotiated Protectionism and Tariffs or Auctioned Quotas: Unilateral forms of protectionism attempt to shift the burden of adjustment from an importer to an exporter, while VERs constitute cross-national cartel agreements that seek to allocate market shares between exporters and importers, thereby sharing the benefits and burdens of protectionism. VERs restrict exports from specific countries in specific product categories are generally negotiated on a country-by-country basis. Model: High barriers to entry should produce a relatively stable cartel. Conversely, low barriers to entry should vitiate the effectiveness of a VER because unrestrained foreign producers will immediately begin exporting the US and bid away any economic rents. If low barrier to entry: If protectionism fails to raise profits for a domestic industry, then, ceterus paribus, firms will increase the intensity of their demand for future trade barriers and the U.S. government will generally be sympathetic towards supplying additional protection On the hand, if trade barriers improve an industry's economic health, then firms in that industry will reduce the intensity of their lobbying efforts, and the U.S. government will be less receptive to those pleas. Irony for producers: the more profits domestic firms generate as a result of trade barriers, the most difficult it becomes to justify those restrictions. If high barrier to entry: n short, we expect protection to be temporary in initial round. If firms can exit, protection will not be renewed. In industries with high barriers to exit: if they do not adjust, will lead to renewed proeectionism.
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