International Trade

These video pages introduce the main ideas in international trade and then apply them to policy questions. Each page combines short explanations, graphical analysis and worked examples. This is still work in progress ---

We begin with the gains from trade, then examine the policy instruments governments use to influence trade, and finally turn to the models that explain why countries trade in the first place.

The policy sections draw on published research where possible. The aim is to move from the clean result in the economic model to the more difficult question of what actually happens to industries, firms and trade flows.

  1. How Countries Gain from Trade Agreements [Enter Module]

    This page begins with the welfare gains from free trade and then asks how countries try to secure those gains through preferential and free trade agreements. The Canada–Chile agreement provides an empirical example, while the Canada–India negotiations offer a current policy application.

    • Gains from Trade Explained: Consumer and Producer Surplus with Free Trade
    • Gains from Trade for an Importing Country
    • Do Trade Agreements Always Help? PTA, FTA and Customs Unions

  2. Tariffs and Export Subsidies [Enter Module]

    This page compares tariffs and export subsidies in small and large countries. The analysis follows their effects on prices, production, consumption, trade, government finances and national welfare, while showing why country size changes the result.

    • Welfare Analysis of a Tariff in a Small Country: Consumer and Producer Surplus, Deadweight Loss
    • Large Country Tariff Analysis: Effects on Trade and Welfare
    • Export Subsidy in a Small Country: Welfare Analysis and Deadweight Loss
    • Export Subsidy in a Large Country: Welfare Loss and Terms of Trade Effects

  3. The Ricardian Model of International Trade [Enter Module]

    The Ricardian model traces trade back to differences in technology and labour productivity. The page develops comparative advantage and specialization, works through common multiple-choice questions, and concludes with a detailed world-equilibrium problem.

    • Ricardian Model Explained: Home Country Analysis
    • Which Country Specializes in Which Good?
    • Terms of Trade and Autarky Price
    • How to Calculate Wages in the Ricardian Model
    • Wage Ratio Between Countries
    • Ricardian Model: Solving for World Equilibrium

Connecting theory with trade-policy research

Economic models help us identify the mechanisms through which a policy should work. Empirical research then asks whether those effects appear in the data and who gains or loses once industries begin to adjust.

My research examines trade agreements, tariffs, antidumping measures and their effects on agricultural trade, protected industries and downstream users. View the related Trade Policy Research.

Further video pages coming soon

Additional pages will extend the sequence to other theories of trade and trade-policy instruments.

  • Antidumping duties
  • Import quotas and other trade barriers
  • Specific Factors Model
  • Heckscher–Ohlin Model
  • Standard Trade Model
  • Economies of scale and trade
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