EECS 1520 Lecture 29: EECS 1520 Lecture 29 Notes
21 Jun 2018
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EECS 1520 Lecture 29 Notes
Introduction
Manufactured products
Firms in some countries receive subsidies from the government provided that the
manufactured products are then exported.
The exporting of products that were produced with the help of government subsidies is
commonly referred to as dumping.
These firms may be able to sell their products at a lower price than any of their
competitors in other countries.
Some subsidies are more obvious than others, and it could be argued that every
government provides subsidies in some form.
Restrictions on Piracy Government restrictions on piracy vary among countries.
A government can affect international trade flows by its lack of restrictions on piracy.
A government that does not act to minimize piracy may indirectly reduce imports and
may even discourage MNCs from exporting to that market.
EXAMPLE
In China, piracy is very common.
Individuals (called pirates) manufacture CDs and DVDs that look almost exactly like the
original product produced in the United States and other countries.
They sell the CDs and DVDs on the street at a price that is lower than the original
product
In fact, they even sell the CDs and DVDs to retail stores.
Consequently, local consumers obtain copies of imports rather than actual imports.
According to the U.S. film industry, as many as 90 percent of the DVDs (which are the
intellectual property of U.S. firms) purchased in China may be pirated.
It has been estimated that U.S. producers of video, music, and software lose $2 billion in
sales each year to piracy in China.
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Document Summary
Firms in some countries receive subsidies from the government provided that the manufactured products are then exported. The exporting of products that were produced with the help of government subsidies is commonly referred to as dumping. They sell the cds and dvds on the street at a price that is lower than the original product. It has been estimated that u. s. producers of video, music, and software lose billion in sales each year to piracy in china. The chinese government periodically promises to crack down, but piracy remains prevalent there. As a result of piracy, china"s demand for imports is lower. Exporting of products that were produced with the help of government subsidies is commonly referred to as dumping. These firms may be able to sell their products at a lower price than any of their competitors in other countries.
