After successful completion of the course, students are able to

• present the economic effects of free trade, its restrictions and various trade policy measures and
• interpret, assess and compare results from various applied models, both in terms of their assumptions and limitations and the effects shown, quantitatively and qualitatively.

The following issues in international trade theory and policy will be dealt with in the course:

1. Introduction to the basic questions and problems
2. The Instruments of Trade Policy (tariffs, subsidies, strategic trade policy)
3. Labour Productivity and Comparative Advantage: The Ricardian Model
4. Specific Factors Model and Income Distribution
5. Resources and Trade: The Heckscher-Ohlin Model
6. Economies of Scale, Imperfect Competition, and International Trade
7. Heterogenous Firms and Trade
8. Analysis of global Value Chains

Methodologically, the course is strongly based on microeconomic concepts. These are in particular analyses based on market supply, demand and market equilibrium concepts and related consumer and producer surplus calculations. Furthermore, neoclassical utility and production functions are introduced which are used within the framework of general equilibrium models. Based on this simple model calculations are created and presented.

written exam