Publication: Journal of Economic Education
Volume: 38, No. 2
Issue: Spring 2007
Pages: 253
Author(s): Sarah Jennings, Sophie Hibberd, Kevin Lyall, and Beverly Goldfarb
Address (Principal Author):
Sarah Jennings
Private Bag 85
Office Phone: 03 62267587
Fax Number: 03 62262828
Internet Address (Principal Author): Sarah.Jennings@utas.edu.au
Title: Partial Equilibrium Analysis of a Customs Union
URL: http://www.utas.edu.au/business/teachinginnovations/bea703_index.html
Descriptive Note:
Given the proliferation of bilateral trade agreements worldwide, it is appropriate to include economic integration in any International Trade unit. Central to the treatment of this topic is the partial equilibrium analysis of the welfare effects of a customs union. This provides a clear means of illustrating the conclusion that not all reductions in trade barriers are welfare enhancing.
We have developed an interactive customs union analysis produced using Macromedia Flash. Although designed to replace face-to-face coverage of the topic, this resource could also be used as an effective complement to a classroom presentation.
The Flash analysis consists of four parts, each linked by a brief video narrative. This helps students develop the “story” that each part of the analysis contributes to. Although students can repeat any part of the analysis, they are encouraged to work through the material in the order in which it is presented.
The first part uses a Flash animation with audio commentary to present and explain the welfare analysis of a trade creating customs union, enabling students to see the analysis being built one element at a time. The remaining three parts of the resource consist of student activities of increasing difficulty. Students first reproduce the analysis themselves by dragging labels into place on a replica diagram. Continuous feedback is provided until all labels are correctly positioned. A second activity requires students to repeat the steps in the analysis for a trade diverting customs union. In this instance no feedback is provided and students must submit a correct diagram to proceed. This progression aids students in building their level of skill and confidence. A third activity lets students explore visually the effects of changes in economic parameters, allowing them to manipulate elements of the diagram for their own self-study and analysis.