Revisiting barriers to trade

Without the opportunity to engage in international trade, the equilibrium price is determined where the total domestic supply of the commodity 2 There are, however, weaknesses associated with the use of cost-of-illness studies. [...] Second, product N can be represented by the same demand curve as product M and that the new health attribute does not change the slope of the demand curve in a meaningful way.6 Thirdly, from the perspective of consumers, more people are willing to buy the new health enhancing product N at the same price. [...] In addition to the direct consumer benefits from functional foods which arise in this market, there may be savings in health care costs7 for the government as a result of the consumption of the functional food. [...] Before the new innovative product enters into the market, the situation for the original product M is the same as in Case 1. DM is the demand curve for a pre-existing product M and the supply curve SM for product M. At Pw, the world price for M, imports would be the difference between what consumers are willing to purchase, QDM, and what producers will supply, QSM , that is (QDM- QSM ). If a cost [...] The further to the left the demand curve for M moves, the larger the price advantage for product M and the more attractive product M will be to consumers.