Trade Barriers: A Game Between Goverments—Based on David Friedman’s Proposition
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The aim of this research is to explain why a government imposes trade barriers, even if theoretically free trade will improve the macroeconomic condition of both countries involved. The study is mainly carried out through graph analysis and example analysis. As the research result, the author finds that although the free trade is incredibly complex, it is valuable especially if exploiting comparative advantages and ultimately leads to lower prices and increased quality of life by allowing more consumer surplus to access to more resources. A potential for nations to capitalize on this situation through strategic political tactics can lead to inflated prices compared to their original domestic rates, and the consequent destruction of industries and elimination of competition.
Free Trade, Tariff, Comparative Advantages