The market power effect of an international joint venture can lead to welfare losses for the domestic economy unless offset by cost reductions.Which type of cost reduction would not lead to offsetting welfare gains for the overall economy?

Question

Quizplus · Accepted Answer

Lower wages extracted from workers would not lead to offsetting welfare gains for the overall economy as it would result in exploitation of the workers and overall negative effects on the economy such as decreased consumption and lower overall growth. On the other hand, R&D generating improved technology, development of more productive machinery, and new work rules promoting worker efficiency would lead to cost reductions and productivity gains which would benefit the overall economy.

The Market Power Effect of an International Joint Venture Can