The Partial Equilibrium Analysis of Trade Policy

Abstract

There are many reasons why a country restricts trade, and tariffs have long been used to do this. Classical economics taught, as we have seen, the blessings of free trade. During the eighteenth and at the beginning of the nineteenth century, tariffs were used primarily to raise government revenue. The taxing of imports is probably the easiest existing means by which a government may acquire income. In the 1840s the teaching of the classical economists started to bear fruit in their home country, England. Income taxes were introduced, protection of agriculture was abolished, and the famous Corn Laws were repealed in 1846. Capitalists and workers joined forces against the land-owning class, and the tariffs which helped English agriculture were abolished. England continued its course toward free trade and was, from the 1850s to the First World War, for all practical purposes, a free-trading nation.