ITRN 504 Micro Trade

ITRN 504: Microeconomics and Trade Policy

Revised: April 25, 2021

Kenneth A. Reinert

Phone: 703-993-8212
Email: kreinert@gmu.edu (best way to get in touch with me)
Office: Founders Hall, Room 627
Office hours: By email appointment and via Blackboard Collaborate Ultra
Home page: reinert.gmu.edu

Study Guide

Course Description

This course provides an introduction to microeconomics and international trade for the International Commerce and Policy student. In the first part of the course, our main objective is to understand the basic principles of the market system underlying local, national, and international economies. Here we will assess both the desirable properties and the limitations of the market system, as well as the appropriate potential roles of government. In the second part of the course, our main objective is to understand the forces behind international trade. Here we will assess the main causes of international trade, their effects, the analysis of trade policies, and the institutions of international trade.

For the Spring 2021 semester, this course is offered as an asynchronous, online course, on the Mason Blackboard platform.

Learning Outcomes

Knowledge and Understanding

Students will understand the basic concepts and terms of microeconomics as they apply to policy analysis.
Students will understand the causes of international trade and the political economy of trade.

Analytical Skills and Abilities

Students will be able to use the supply and demand model for policy analysis, including trade policy analysis, and to calculate elasticities.

Professional Development

Students will be conversant with the basic terms of economic trade policy analysis as used in the profession.

Required Books

Reinert, K.A. (2021) Marshall’s Blackberries: A Short Introduction to Microeconomics. Free on Blackboard! Note: This textbook is a work in progress and will be updated periodically on Blackboard during the semester.

Reinert, K.A. (2021) An Introduction to International Economics: New Perspectives on the World Economy, Cambridge University Press. The most accessible and inexpensive textbook in international economics on the planet!

Course Requirements and Grading

Midterm exam- 30 percent
Cumulative final exam- 30 percent
Problem sets- 25 percent
Class participation- 15 percent

Course Outline and Readings

Week 1 (January 25): Introduction to Class

View the welcome video on Blackboard.

Read Marshall’s Blackberries, Chapter 1, “Marshall’s Blackberries.”

Read Introduction to International Economics, Chapter 1, “Introduction.” (Power Point here)

Introduce yourself on the Blackboard discussion board, post at least one question/comment, and respond to at least one question/comment.

Recommended:

K.A. Reinert (2017) “Globalisation(s) and Development,” Edward Elgar blog, March 22.

Week 2 (February 1): Tools of Analysis

Read Marshall’s Blackberries, Chapter 2, “Tools of Analysis.”

Begin Problem Set 1 on Blackboard.

Review the following whiteboard presentations: Linear and Nonlinear Graphs, Resource Constraint, Total, Averages and Marginals, and Production Possibilities Frontier.

On the Blackboard discussion board, post at least one question/comment, and respond to at least one question/comment.

Week 3 (February 8): The Supply and Demand Model

Read Marshall’s Blackberries, Chapter 3, “The Supply and Demand Model.”

Begin Problem Set 2 on Blackboard.

Review the following whiteboard presentations: Market Equilibrium and Shifts in Demand and Supply Curves.

On the Blackboard discussion board, post at least one question/comment, and respond to at least one question/comment.

Week 4 (February 15): Elasticities

Read Marshall’s Blackberries, Chapter 4, “Elasticities.”

Problem Set 1 due.

Review the following whiteboard presentations: Stacked Fractions in Elasticity Formulas and Price Elasticity of Demand and the Linear Demand Curve

On the Blackboard discussion board, post at least one question/comment, and respond to at least one question/comment.

Week 5 (February 22): Allocative Efficiency and Taxes

Read Marshall’s Blackberries, Chapter 5, “Allocative Efficiency and Taxes.”

Problem Set 2 due.

Review the following whiteboard presentations: Consumer and Producer Surplus, Changes in Consumer and Producer Surplus, and Allocative Efficiency,

On the Blackboard discussion board, post at least one question/comment, and respond to at least one question/comment.

Wednesday, February 24, 2021, 6:00 PM EST, Roundtable, Does the WTO Still Matter? with Chief Economist of the WTO Robert Koopman. limited Zoom admission.

Recommended:

Marshall, A. (1893) “Consumer’s Surplus,” Annals of the American Academy of Political and Social Science, 3, 90-93.

Week 6 (March 1): The Theory of the Firm 

Read Marshall’s Blackberries, Chapter 6, “The Costs of Production.”

Begin Problem Set 3 on Blackboard.

Review the following whiteboard presentations: Average and Marginal Product of Labor, Total Product of Labor and Total Cost Curve.

Review the following whiteboard presentations: Profit Maximization with AVC, ATC and MC Curves

Recommended:

Brue, S.L. (1993) “The Law of Diminishing Returns,” Journal of Economic Perspectives, 7:3, 185-192.

Week 7 (March 8): The Theory of the Firm Continued

Read Marshall’s Blackberries, Chapter 7, “Firm Supply.”

Continue Problem Set 3.

View the following whiteboard presentations: Profit Maximization with AVC, ATC and MC Curves

On the Blackboard discussion board, post at least one question/comment, and respond to at least one question/comment.

Recommended:

Hughes, P. (2006) “The Economics of Nonprofit Organizations,” Nonprofit Management and Leadership, 16:4, 429-450.

Kogut, B. and U. Zander (1996) “What Do Firms Do? Coordination, Identity, and Learning,” Organization Science, 7:5, 502-518.

Week 8 (March 15): Midterm Exam

See study guide link at top of page.

Problem Set 3 due.

The midterm exam will be posted on Blackboard on Monday March 15th by 9:00 AM. It is due on Friday March 19th by midnight with scanned images. 

Week 9 (March 22): Market Failure (Monopoly, Externalities, Public Goods)

Read Marshall’s Blackberries, Chapter 7, “Market Limitations.”

View Whiteboard recording posted on Blackboard on the monopoly model diagram.

Begin Problem Set 4.

On the Blackboard discussion board, post at least one question/comment, and respond to at least one question/comment.

Recommended:

Bauman, Y. and S.-L. Hsu (2012) “The Most Sensible Tax of All,” New York Times, July 4.

The Economist (2017) “Externalities: Pigouvian Taxes,” August 19.

Mankiw, N.G. (2007) “One Answer to Global Warming: A New Tax,” New York Times, September 16.

Week 10 (March 29): International Trade

Read Introduction to International Economics, Chapter 2, “Absolute Advantage” and Chapter 3, “Ricardian Model of Comparative Advantage.” (Power Points here)

Erratum for Figure 3.5.

View the following whiteboard presentations: Absolute Advantage and the Ricardian Model

Problem Set 4 is due. Begin Problem Set 5. 

On the Blackboard discussion board, post at least one question/comment, and respond to at least one question/comment.

Week 11 (April 5): International Trade Continued

Read Introduction to International Economics, Chapter 4, “Heckscher-Ohlin Model of Comparative Advantage” and Chapter 5, “Intra-Industry Trade.” (Power Points here)

On the Blackboard discussion board, post at least one question/comment, and respond to at least one question/comment.

Week 12 (April 12): Political Economy of Trade and Trade Policy

Read Introduction to International Economics, Chapter 6, “The Political Economy of Trade” and Chapter 7, “Trade Policy Analysis.” (Power Points here)

Problem Set 5 due. Begin Problem Set 6.

On the Blackboard discussion board, post at least one question/comment, and respond to at least one question/comment.

Recommended:

González, A. (2020) “A Memo to Trade Ministers on How Trade Policy Can Help Fight COVID-19,” Trade Policy Watch, Peterson Institute for International Economics.

The Economist (2017)  “Politicians Cannot Bring Back Old-Fashioned Factory Jobs,” January 14.

Week 13 (April 19): The WTO and Preferential Trade Agreements

Read Introduction to International Economics, Chapter 8,”The World Trade Organization,” and Chapter 9, “Preferential Trade Agreements.” (Power Points here)

Recommended:

The Economist (2008) “Regional Trade Agreements: A Second-Best Choice,” September 4.

Laïdi, Z. (2013) “Trade Deals Show Power Politics Is Back,” Financial Times, March 31.

Week 14 (April 26): Review of Semester

Problem Set 6 is due.

Please send me questions you have for the whole semester for review. As best as I can, I will post answers on Blackboard in the form of whiteboard recordings.

Week 15 (May 3): Cumulative Final Exam, Online

See study guide link at top of page. 

The final exam will be posted on Blackboard on Monday May 3rd by 9:00 AM. It is due on Friday May 7th by midnight with scanned images. 

Other Useful Books

Baldwin, R. (2016) The Great Convergence: Information Technology and the New Globalization, Harvard Univesity Press. Just what the title says!

Evenett, S. (2017) Cloth for Wine? The Relevance of Ricardo’s Comparative Advantage in the 21st Century, Vox. A contemporary look at Ricardo’s principle of comparative advantage by some leading trade economists.

Goldin, I. and K.A. Reinert (2012) Globalization for Development: Meeting New Challenges, Oxford University Press. A review of multiple dimensions of globalization and their relationships to development.

Findlay, R. and K.H. O’Rourke (2007) Power and Plenty: Trade, War, and the World Economy in the second Millennium, Princeton University Press. An extraordinary history of world trade going back to ancient times.

Hoekman, B.M. and M.M. Kostecki (2009) The Political Economy of the World Trading System, Oxford University Press, Oxford. A must-have introduction to the WTO for trade policy analysts.

Levinson, M. (2006) The Box, Princeton University Press. A business history of container shipping and its impacts on the world trading system.

Lindblom, C.E. (2001) The Market System, Yale University Press. A review of market systems from a noted political scientist.

Reinert, K.A. (ed.) (2017) Handbook of Globalisation and Development, Edward Elgar. A comprehensive collection of chapters on all aspects of globalization and their relationship to development.

Reinert, K.A. and R.S. Rajan (eds.) (2009) The Princeton Encyclopedia of the World Economy, Princeton University Press. A useful reference on all aspects of international economics. Available in the Arlington library and in electronic form through the library catalog.

Tirole, J. (2017) Economics for the Common Good, Princeton University Press. An insightful book on all aspects of microeconomics from a Nobel Laureate.

Walter, A. and G. Sen (2009) Analyzing the Global Political Economy, Princeton University Press. A very good introduction to the theory of global political economy.

Useful Podcast

Trade Talks

Some Policies

No texting in class unless in an emergency.

Exams are not “open book” or “open notes.”

There is no “extra work” that can be done for “extra credit.”

Students are responsible for obtaining notes from other class members if they miss a class.

The GMU honor code will be enforced. To be more specific: If I can show that a student cheated on an exam, that student will fail the course.

It is my personal policy not to discriminate among students based on race, ethnicity, religious faith, national origin, gender, sexual orientation, physical ability, or citizenship status.

Academic Accommodation for a Disability

If you are a student with a disability and you need academic accommodations, please see me and contact the Disability Resource Center (DRC) at 703-993-2474.  All academic accommodations must be arranged through the DRC.