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    Quotas vs tariff dilemma

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    Which measure causes the least damage economically and why?

    Import quotas vs. Tariffs

    © BrainMass Inc. brainmass.com June 4, 2020, 4:35 am ad1c9bdddf

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    Import tariffs cause the least damage economically. Importers under a quota system are placed in a monopoly like situation and can gain high profits. When compared with tariffs, under quotas the same restriction produces higher price rise in the home country. There is a theory of tariff-quota equivalence which assumes perfect competition. The theory says that if perfect competition prevails in the market a tariff and import quota are equivalent in the sense that ...

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    This solution explains quotas vs.tariffs. The sources used are also included in the solution.