The Effect of Free Trade Agreement

摘要：

When governments choose their tariff independently to protect domestic firms and enhance social welfare,governments can prevent import with an optimal tariff.However,if free trade agreement can be carried out by calling off tariff between countries,production,exports and consumption can be promoted within these countries,improving the social welfare of these countries,although governments would loss their tariff revenue due to the agreement.This is beneficial for all aspects in these countries and known as creative effect of trade.Nevertheless because of transfer effect of trade,countries out of the free trade agreement will loss part of their social welfare when free trade is implemented among other countries,for their exports to countries within the agreement would fall and consequently the companies profits lessen.Since the free trade agreement would benefit countries within it but go against countries out of it,so countries should try to enter a free trade agreement when it is to found to enjoy the advantages of free trade and avoid the disadvantages of free trade agreement being set up between other countries.

关键词： Free trade agreement Social welfare Optimal tariff

作者: Wang Zhigang

作者单位: School of Economy and Management,Wuhan Institute of Physical Education,Wuhan,P.R.China ,430079,P.R.China

会议类型: 国际会议

会议名称: 第三届产品创新管理国际会议(The 3rd International Conference on Product Innovation Management)

会议地点: 武汉

会议语种:英文

在线出版日期: 2008-10-26（万方平台首次上网日期，不代表论文的发表时间）