商务谈判课本-英文翻译-第一节.doc

这是谈判课老师要求我帮忙翻译的部分。原文是《国际商务谈判》第二章国际商务谈判理论的第一和第三小节，主编丁溪。仅供交流参考，若有遗漏错误，欢迎留言指正。

SECTION 1   the Economic theory
Translated by Skeady.Z

When we are talking about ensuring the price of trade, we often use the models with the theory of comparative advantage and the theory of reciprocal demand. The models of the theory of trade mainly deal with why international trade happens and whether the profit distribution in trade is balanced or not. In brief, the behaviors of dealers in the trade are under the circumstances in which of two interests choose the more, while of two evils choose the less. In other words, if one was reduced to absolute inferiority while the other achieved absolute superiority in labor productivity. Only if the gaps of every goods between them are the same, it is profitable for the Inferior one. However，the theory of comparative advantage did not point out how to ensure the price.

Please see Table 2-1 and Figure 2-1.
                 TABLE 2-1 Comparative Advantage

X
Y
A
10
15
B
10
20

As is shown in Table 2-1, for examples, there are two producers, Country A and Country B and they produce two products, Product X and Product Y. They use the labor time to show the different labor productivity, and the amount of products in a unit hour to show the difference between labor productivities. That’s to say, in a unit hour Country A can produce 10 units Product X if it only produces Product X, whilst it can produce 15 units Product Y if it only produces Product Y. Likewise, Country B can produce 10 units Product X or 20 units Product Y in a unit hour.

According to the hypothesis of Table 2-1, Country A and Country B have same labor productivity in producing Product X, although Country B is more efficiently in producing Product Y.

In addition, we can also see from the Table that the rule of exchange of equal values between those goods is 10 units Product X can exchange 15 units Product Y. Because such amounts of product cost same labor in Country A, they have equal value. In like manner, the exchange rate of those goods in Country B is 10X: 20 Y.

According to The Principle of Comparative Advantage, Country A achieves to absolute superiority in producing Product X while Country B achieves absolute in Producing Product Y. Therefore, if the two countries open the market and begin to trade with each other, Country A should produce and export Product X, while import Product Y. Conversely, Country B should produce and export Product Y while import Product X.

So what’s the exchange rate of Product X and Product Y while trading?

Let’s take Country A into consideration first. The same resource can produce 10 units Product X or 14 units Product Y in this country. If we want to make the deal more profitable than to produce here, the lowest exchange ratio is 10X: 15Y.As a result, for Country A, only if 10 units Product X can exchange over 15 units Product Y, like 16 units, 17 units, 18 units or 19 units that motivate it to enter the international market.

Similarly, Country B uses self-producing Product Y to exchange Product X from Country A, if we want to make the trade more profitable than to produce here, the lowest exchange proportion is 20Y: 10X.As a result, for Country B, only if it can use less than 20 units Product Y, like 18 units,19 units, to exchange 10 units Product X, that motivate it to enter the international market.

For this reason, the interest of Country A is from top to bottom while the situation in Country B is directly conversed. But they all have the frontiers. Although Country A hope to get more Product Y with 10 units Product X, the frontier is 10X: 20Y.As it reaches this ratio, Country B will quit because it’s much more profitable to produce itself. On the contrary, so is the similar situation in Country A. Although it hope use much less Product Y to get equal Product X, the upper limit is 10X:15Y.As it reaches this ration, Country A will quit.

As is shown in Figure 2-1, the horizontal axis shows Product X and the vertical axis shows Product Y. The tow lines show the exchange ratio of Country A and Country B. The one close to the horizontal axis is the ratio of Country A, which is 10X ：15Y，while the other one close to the vertical axis is the ratio of Country B. Which is 10X: 20Y.It can be seen from the figure that the zone below the line of Country A is the no-trade zone of this country. Because 10units Product X can exchange less than 15 units Product Y in this zone, and it’s better for Country A to product and trade in the domestic market rather than run international trade. It’s similar for Country B. The left zone of the line of Country B, which is close to the vertical axis, is the no-trade zone of Country B. In this zone, it needs to use more than 20 units Product Y to get 10 units Product X. So it prefers to product and trade in the domestic market. Furthermore, the zone between the two lines is the trade zone of these two countries. The price of trade is a straight line extending from a point. But in this zone, we can get countless lines for the point. As a result, the Theory of Comparative Advantage of David Ricardo can ensure the trade frontier of them, but it can’t ensure the exact location of the price line.

(Figure 2-1 EXCHANGE RATIO ommited)

To ensure the price line, we need to use the theory of reciprocal demand. The price of international trade is determined by demand and supply like the domestic economic activities. However, this kind of demand of supply is much different; please see Figure 2-2.

(Figure 2-2 INTERNATIONAL DEMAND AND SUPPLY ommited)

Figure 2-2(a) is the general information of demand and supply of Country A, and Figure 2-2(c) is the general information of demand and supply of Country B while Figure 2-2(b) is general information of demand and supply of the world.

Figure 2-2(a) presents the partial equilibrium. The horizontal axis describes the product quantity, i.e. Q. And the vertical axis describes the price, i.e. P. We can find corresponding equilibrium quantity and equilibrium price above the equilibrium point. The Point E is the intersection point of SA and DA, which are short for Supply line and Demand line. So is in Figure 2-2(c).We can see from the figure that the unit price to produce this good in Country A is much higher than that in Country B. Let’s suppose the world market consists of Country A and Country B, that’s to say Country A and Country B constitute the whole international market. In this circumstance, goods will flow from the country with high price to the country with low price (certainly there is a prerequisite that is there isn’t any trade barrier between countries), to get much more interests. We can see the progress from Figure 2-2(b).It’s clear from the figure that because it costs more to produce this product in Country A than that in Country B, the product from Country B will flow to Country A so that it can make more profits.

Now let’s analyze the progress at the aspect of figure. We draw a broken line from PA to Figure-2 (b), and find a point (PA) on the Vertical axis of this figure; in the same way, draw a parallel broken line from PB, and find a point (PB) on the vertical axis of this figure. In order to fine Pw, the World Equilibrium Price in the figure, we should look for a balanced line, on which the Line M between the Supply Curve and the Demand Curve in Figure 2-2(a) is just as long as the Line N between the Supply Curve and the Demand Curve in Figure 2-2(c).Therefore the export supply of Country B can meet the import demand of Country A, and Pw is the balance price of the world market.

As the relationship of supply and demand between these two countries changes, the price and the balance quantity will change too. If it’s not the change of the demand preference but rather the fluctuation of price, then there will be an automatic adjustment mechanism which brings the price back to the equilibrium point. In theory, the price of the international market is adjusted by the continuous change of the relationship between the supply and the demand. But in fact, there are many factors else have influence besides it, such as the political relationship between two countries, the economic strength and international economical situations and so on. As a result, their price is very different.

In the long run, it’s the inexorable trend that the price will stop in the balance point. But the two countries can make the practical price deviate with their negotiation skills so that the benefits they got will be different. That’s the so called “the power of negotiation”.