This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: * results in two DEADWEIGHTLOSS triangles (one from overproduction of the product/ underconsumption of the product) due to the consumer surplus that wont be realized distorts incentive/ inefficient allocation- tax revenue = change in price * (quantity demanded w/ tariff quantity supplied w/tariff) effect is to reduce import and move domestic trade closer to equilibrium price without trade Tariff raises quantity of domestic demand due to increase of price of substitute Arguments for restricting trade: 1) National security (overreliance on other countries/sufficient independence for war etc.) 2) Domestic job loss 3) Infant industry (Koreas LG) to help them get started w/ less competition 4) Unfair competition (subsidy by gov on a product 5) Tariff as bargaining chip ( Ill remove this tax if you remove that tax.) negative externalities? Ex. pollution...
View Full Document
This note was uploaded on 04/02/2010 for the course AGEC 200 taught by Professor Anwarnaseem during the Winter '10 term at McGill.
- Winter '10