Barriers and Trade

Revision notes for Unit 3 Business studies Edexcel on Barriers and Trade (Full diagrams)

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Harry Bindloss
Protectionism: The intervention by governments in the free trade between nations. The
methods available usually attempt to reduce imports (to protect domestic production) and
are therefore often referred to as trade barriers, although other methods may seek to
encourage exports.
Tariffs: Taxes levied by the government on imports of particular goods. The effects of a
tariff are decreased imports and this will mean that the domestic producers are now
protected. If imports are reduced then this will mean that the country will have to start
making them more domestically.
Advantages of Tariffs
Increases government revenue
Demerit goods ­ Less produced
Decreases imports ­ Protects domestic producers
Decreases dumping

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Harry Bindloss
Disadvantages of Tariffs
Increased prices ­ bad for domestic consumers
Less competition ­ firms may become less efficient
Decreased consumer welfare
Tariff wars may arise
Import Quotas: Limiting the quantity of a particular good that is allowed into the country
over a period of time.…read more

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Harry Bindloss
Stringent health and safety regulations and other standards
Subsidising domestic production
Non-competitive purchasing by governments
Delaying imports at borders through excessive administration
Advertising campaigns to buy domestic goods
Environmental standards
HOWEVER ­ You can't measure NTB's, NTB's are increasing.
1. Non-economic arguments ­ Local citizens may choose to preserve culture rather
than maximise national income. Therefore they will use protectionism to reduce
imports and protect the local producers. They may also do it in case of wars etc.…read more


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