Many economists support free trade. However, in some circumstances, there are arguments in favour of trade restrictions. These include when developing economies need to develop infant industries and develop their economy. Reasons for blocking free trade Infant industry argument If developing countries have industries that are relatively new, then at the moment these industries would …
Agriculture often appears to be one of the most difficult industries, frequently leading to some form of market failure. In the EU and US, agriculture is the most heavily subsidised industry, yet despite the cost of the subsidy it fails to address many issues relating to agriculture. Types of market failure in agriculture Volatile Prices …
Readers Question: Why do some firms prefer to remain small? In recent times, the tendency is for product markets to be dominated by large multinational corporations who can benefit from various economies of scale. However, despite this general trend, there are still advantages to being a small firm. Benefits of being a small firm Concentrate …
In this recent post we saw some of the economic and political challenges of allowing free movement of labour within an economic block, such as the EU28. To what extent can the government / EU mitigate these negative impacts, whilst retaining free movement of labour? 1. Funding related to number of people. One issue of …
Performance related pay is a system where employers pay employees depending on the quality of their work. In it simplest form, performance related pay is payment by ‘piece meal’. For example, a worker gets paid £1.00 per Kg of potatoes that they pick. This piece meal payment is an effective way to give workers an …
The rise of UKIP and Euro-scepticism in the UK inspired me to have another look at an old blog post – Benefits of the European Union. I’ve spent the past four years criticising the economic policy of the EU, and more specifically the ECB. There are may good reasons to be dissappointed at the EU …
Resale price Maintenance RPM used to be a common practise for manufacturers to set a minimum price for retailers to sell their goods. In the UK, the use of RPM was quite common in the post-war period from clothes to books, records, clothes and electronic goods. It ensured a minimum price of resale and avoided …
Internal Devaluation – where a country seeks to regain competitiveness through lowering wage costs and increasing productivity and not reducing the value of the exchange rate. A devaluation of the currency is a decision to allow a currency, in a fixed or semi-fixed exchange rate, to decrease in value. Devaluing the currency means that the …