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Economy question; calling P*D and everone else
Topic Started: Feb 22 2017, 10:49 AM (158 Views)
Klaus
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HOLY CARP!!!
If a country imposes restrictions on free trade, is it rational for other countries to "retaliate" with restrictions of their own, or should they keep their markets open to that country? By "rational", I mean which choice will be best for them economically.

Are there any theories about that? Maybe the theory of competitive advantage can be used to address that question?
Trifonov Fleisher Klaus Sokolov Zimmerman
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Renauda
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HOLY CARP!!!
It's a difficult question that is normally dealt with on case by case basis. Generally a country does not want to retaliate in a manner that would do unnecessary harm to its own economy. Here is an article discussing the question from Canada's own experience with US over labeling:

http://www.theglobeandmail.com/opinion/canada-should-punish-the-us-over-labelling-but-does-it-justify-a-trade-war/article11987214/?arc404=true

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brenda
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..............
Retaliation with trade restrictions is tempting, but a country has to decide whether it might only cause further escalation. It boils down to short term versus long term strategy.

Edit: Renauda has a good article with specific cases from Canada. Nice article, Renauda.
Edited by brenda, Feb 25 2017, 06:58 AM.
“Weeds are flowers, too, once you get to know them.”
~A.A. Milne
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