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Comparing Trade Instruments Using Spreadsheets

Berry College, stohamy{at}campbell.berry.edu

J. Wilson Mixon, Jr.

Berry College, wmixon{at}campbell.berry.edu

This article describes the use of Microsoft Excel to illustrate how different trade instruments affect total welfare. The article highlights seven Excel worksheets that show different trade instruments and their effect on total welfare. The first worksheet shows the determination of world equilibrium price and quantity for a two-country world example. A second shows how the imposition of a tariff affects the equilibrium price and quantity for both countries and the welfare of consumers and producers in both countries. A third shows how these same variables are affected if the country imposing the tariff is small relative to all other countries in the world. Another shows graphically how to measure consumer and producer surplus. The final three worksheets compare the effects of a tariff, a subsidy, and a support price on consumers’ and producers’ welfare and government revenue.

Key Words: tariff • subsidy • support price • spreadsheets

Social Science Computer Review, Vol. 20, No. 2, 187-193 (2002)
DOI: 10.1177/089443930202000208


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