Econ 333 Oct 21 Ch 8

Econ 333 Oct 21 Ch 8 - Chapter 8 Quotas and Nontariff...

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Chapter 8 Quotas and Nontariff Barriers to Trade
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Have you seen it? When crossing the border into another state there is frequently a place where truck drivers have to stop before they can continue to drive into the state. This increases the cost of interstate trade. NTBs are just this kind of thing between countries. NTBs are not uniformly distributed among all product categories/heavily influence trade in some product categories
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Quotas versus Tariffs Quotas restrict imports of a good to a certain quantitative level. the higher price received by the foreign firms creates additional revenue that accrues to the foreign producers and makes them more profitable A tariff is a tax on the imported good. the amount of tariff revenue the government collects can be spent on the provision of public goods. As a result, the net welfare loss to the quota- imposing country is larger under a quota than a tariff.
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Small Country Quota D S S quota P quota a b (tariff $$) d P world quota
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U.S. Sugar Quota Sugar producers win extra profits U.S. consumers lose ($25 per family per year) or $1.6 billion total per year Industries using sugar as input lose—higher prices mean lower demand and they cannot compete against foreign companies using world-
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This note was uploaded on 09/23/2009 for the course ECON 333 taught by Professor Roberts during the Spring '09 term at Ill. Chicago.

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Econ 333 Oct 21 Ch 8 - Chapter 8 Quotas and Nontariff...

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