Term
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Definition
| Legally a part of china, but economically seperate. They are the only modern economy with no tariffs or import quotas |
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Term
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Definition
| For free trade. Restrictions limit this. Too much protection incentivize too many firms to enter the industry artificially |
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Term
| Incentives for Entreprenuers |
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Definition
| free trade allows them to seek new ways to learn and innovate |
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Term
| More productive firms engage in exporting |
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Definition
| this implies that with free trade the economy as a whole will be more efficient by shifting the industrial mix to more productive firms |
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Term
| When imports are restricted with a quota instead of a tariff |
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Definition
Rent seeking occurs and the cost is sometimes magnified, individuals and companies incur costs trying to obtain these license
Creates incentive to overinvest |
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