commercial policy  government policy that influences international trade flows
customs union  an organization of nations whose members have no trade barriers among themselves but are free to fashion their own trade policies toward nonmembers
free trade area  an organization of nations whose members have no trade barriers among themselves but are free to fashion their own trade policies toward nonmembers
increasing-returns-to-scale industry  an industry in which the costs of producing a unit of output fall as more output is produced
median voter theorem  candidates or parties select positions on issues that reflect the median voter’s positions on those issues
quantity quota  a limit on the amount of a good that may be imported
strategic trade policy  the use of trade restictions or subsidies to allow domestic firms with decreasing costs to gain a greater share of the world market
subsidies  payments made by government to domestic firms to encourage exports
tariff  a tax on imports or exports
trade creation  an effect of a preferential trade agreement, allowing a country to obtain goods at a lower cost than is available at home
trade diversion  an effect of a preferential trade agreement, reducing economic efficiency by shifting production to a higher-cost producer
value quota  a limit on the monetary value of a good that may be imported