What are the effects of a tariff, and who benefits and who loses when tariffs are imposed? What are the effects of a quota, and who benefits and who loses when quotas are imposed?
A tariff raises the domestic price of the good the tariff is placed on. The higher price benefits domestic producers, and the tariff revenue benefits the government, both at the expense of domestic consumers. A quota raises the domestic price of the good with the quota imposed on it. The higher price benefits domestic producers and the foreign producers who are allowed to sell the good, both at the expense of the domestic consumer.
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One possible source of inefficiency in bargaining is
A) that there are multiple Nash equilibria. B) bounded irrationality. C) that the Nash product may be indeterminant. D) that the bargaining process takes time.
According to the text, which of the following is a principal reason why firms merge?
a. to form a cartel b. to exercise greater market control c. to increase their product differentiation d. to decrease their product differentiation e. to become a monopoly