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Optimum Tariff

Optimum Tariff. Derivations. Imports and Exports. Home Demand. Home Supply. Home Imports . Foreign Exports. Domestic and World Prices. loss. loss. gain. Tariff and Prices. --Home Imports=Foreign Exports:. Pre-tariff world price and post tariff home price:. :Post tariff world price.

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Optimum Tariff

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  1. Optimum Tariff Derivations

  2. Imports and Exports Home Demand Home Supply Home Imports Foreign Exports Domestic and World Prices

  3. loss loss gain

  4. Tariff and Prices --Home Imports=Foreign Exports: Pre-tariff world price and post tariff home price: :Post tariff world price

  5. The tariff and domestic welfare

  6. Gain-Loss=tU-t2V Where U and V are positive expressions independent of the level of tariff, t. If t is small enough the first term exceeds the second term. Conclusion: the optimum tariff is positive!

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