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Introduction

Introduction. January 29, 2007. Once upon a time. ....Most goods that we consume are farmed/produced within 50kms from our home…. Oilfish contains indigestible wax elements that cause diarrhoea for some Banned in Japan and Italy.

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Introduction

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  1. Introduction January 29, 2007

  2. Once upon a time ....Most goods that we consume are farmed/produced within 50kms from our home….

  3. Oilfish contains indigestible wax elements that cause diarrhoea for some Banned in Japan and Italy. ParknShop mislabeled oilfish as codfish, and withdrew it from sale after reports of 14 sickness cases (SCMP, 24 Jan 2007) Reports of stomach upsets after eating “Japanese cod fish” in a well known fast food restaurant (C2, SCMP, 27 Jan 2007) Welcome admitted selling oilfish as codfish (SCMP, 27 Jan 2007) The Oilfish incident

  4. Fake products in the mainland • Fake products • milk powder, cosmetic product, medicine • food with antibiotics/pesticide • hairy crab, alleged to be treated with antibiotics to make them healthy • “shinny, unusually red” orange • Bottom line: A good’s quality is not known by buyers; some role of government

  5. Two solutions • Government agency: • Government failure: lack of incentive, expertise, law, or resource • Private sector monitoring: • It takes time • “Market will improve itself” (faith or science?) • Rajan & Zingales: “Saving Capitalism from the Capitalists”

  6. “The Chicago school” • Steven Levitt (author of Freakonomics ，Clark award recipient): http://www.econ.hku.hk/video/index.html • “…It is great to believe in free market, but it is bad to have an ideology when you come to research…It is just dangerous to have an ideology when you come to a field like economics… If there is anything in the future… the new generation of Chicago price theorists should not be ideological in the same way that the old generation is…The tools are just good at studying market failure…”

  7. There are more problems … • What does it mean that China liberalizes its water supply? • Natural Disaster • Many fish have extinguished or been decimated; we now eat species that we didn’t • Global warming

  8. Globalization • A contradictory process • Goods are getting cheaper and cheaper • Jobs are getting less and less secure (plus other problems…) • Thomas Friedman (in his “World is Flat”): • When I was a kid and I didn’t eat, my parents said: “Please eat it. Children in China and India don’t have enough food to eat.” • When my daughter does not eat, I say: “Please eat it. Children in China and India are already eating your food!”

  9. What is next? • One-factor Ricardian Model (gain from trade) • Two-sector Model (income distribution) • Imperfect Competition Model (intraindustrial trade, strategic trade) • Trade Policy, rules in WTO • Newer theories that criticize and refine these trade theories

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