3 Industry-level and General Equilibrium Analysis

We can analyze trade interventions and the consequence in industry-level ("partial") equilibrium or general equilibrium.

3.1. In general-equilibrium analysis, we typically assume that production has constant returns to scale. In industry-level analysis, we typically assume that production has decreasing returns to scale. Which perspective do you consider more adequate for long-term and short-term analysis?

3.2. To infer a country's overall welfare, which approach is more adequate? To make costbenefit analysis by industry, which approach is more helpful?

3.3. Can we analyze the case of a small country (with no impact on world market prices) in either industry-level and general equilibrium? Can we analyze the case of a large country in either way?

3.4. To study the distribution of gains from an import tariff or an export subsidy between producers and consumers, which approach is more helpful? To study the distribution of gains between different factors of production in the long-term, which approach is more helpful?

3.5. Considering a large country, how does an import tariffs and how does an export subsidy affect welfare overall, the income of the relatively abundant factor if there are two factors of production, and the distribution of gains between producers and consumers in a single industry market?