The International Trade Game can be
used to illustrate the following economic topics:
Specialization and division
of labor. How did teams divide up the
tasks? Was it more efficient to have some students
cutting out the shapes, while others queued to sell
the shapes, negotiate, scout around to see what other
teams were doing or determine whether there were opportunities
that could be of benefit?
Opportunity cost. What
was the cost — in terms of lost time, value
from shapes, lack of access to equipment, etc. —
of particular decisions?
Supply and demand and
the determination of price. Why
did prices vary as they did in the game? What determines
the magnitude of commodity price changes in the real
world?
Prices as signals and
incentives. How did teams respond to
price changes? How elastic was their supply? Did anticipated
price changes affect the production of shapes or when
they were taken to the trader?
Derived demand and the
price of inputs. How did the prices
of shapes affect the price of various pieces of equipment
or their rental value? Do the same principles apply
to pencils (in relatively plentiful supply) and scissors
(in relatively short supply)?
Cartels and oligopolistic
collusion. What cartels formed? What
cartels could have formed, and how would they have
affected the balance of advantage in the game?
Game theory: strategy,
bargaining, trust, etc. What incentives
were there for sticking to agreements and for breaking
them? How would the number of people in a team or
the number of teams involved in an agreement affect
the likelihood of sticking to or breaking an agreement?
How did risk attitudes determine strategy?
The law of comparative
advantage. Why do countries specialize
in particular products? How does this depend on their
resources? How does it relate to opportunity cost?
Terms of trade. What
determines the relative price of shapes and how does
this relate to resources? Can countries influence
the price of shapes?
World inequality. You
could refer to the distribution of resources in the
world and ownership patterns. What determines whether
inequality is likely to increase or decrease over
time?
The importance of market
power in international trade. What is
the role of multinationals? How do they control markets?
Is there anything that developing countries can do
to create countervailing power?
The importance of resources
and technology in determining trade patterns. Certain
equipment is best designed to produce certain shapes.
You could show how control over this equipment affects
the pattern of trade and can influence prices.
Imperfect information
and acting on expected prices. How do
price expectations influence production and the timing
of sales? On what basis are price expectations formed?
Do people learn from experience?
Risk and uncertainty.
There are several aspects of the game
that involve uncertainty. These include the likelihood
of obtaining equipment, future prices, the outcome
of the paper auction, the role of the colored sticky
shapes, the effects of negotiations between other
countries on their behavior and whether and what punishment
will be imposed by the leader for “malpractice.”
Bidding and auctions.
What determines the price at auctions?
What determines whether there will be any collusion
between bidders? What would be the outcome of that
collusion?
The game may also be used to illustrate
a number of more general development issues, such as
the powerlessness of poor countries. It gives participants
the opportunity to experience various emotions concerned
with production and trade in an unequal world —
emotions such as envy, greed, frustration and the desire
to escape poverty by any means. In so doing, it can
help students to gain a greater empathy with development
and trading issues. It encourages students to move away
from a typical textbook account of the embedded ideas
and prompts them to consider alternative motives that
might prompt economic behavior.
