LARGE COUNTRY CASE AND OPTIMAL TARIFF THE ASSUMPTION HERE IS THAT THE IMPORTING COUNTRIES POLICIES CAN IMPACT WORLD PRICES

A POLICY THAT REDUCES A COUNTRY’S IMPORTS WOULD LOWER WORLD PRICE

PRICE QUANTITY PWPW IMPORT NO TARIFF S D ES ED

PRICE QUANTITY PWPW IMPORT TARIFF S D ES ED

PRICE QUANTITY PWPW IMPORT TARIFF A D B E C H FG I J P W1 P1P1 S D ES ED

PRICE QUANTITY PWPW IMPORT TARIFF A D B E C H FG I J P W1 P1P1 INCREASE IN PRODUCER SURPLUS S D

PRICE QUANTITY PWPW IMPORT TARIFF A D B E C H FG I J P W1 P1P1 S D CONSUMER LOSS

PRICE QUANTITY PWPW IMPORT TARIFF A D B E C H F G I J P W1 P1P1 S D GOVERNMENT REVENUE

PRICE QUANTITY PWPW IMPORT TARIFF S D ES ED PIPI P W’ A H F C E B D G QTQT LOSS TO EXPORTERS

FIXED INTERNAL PRICES BY IMPORTERS A VARIABLE LEVY

THE AMOUNT OF THE TARIFF CHANGES AS THE WORLD PRICE CHANGES L = P T - P W

S ED PTPT PWPW TARIFF D PRICE QUANTITY

S PTPT PWPW TARIFF D PRICE QUANTITY PWPW WORLD PRICE FALLS - TARIFF SIMPLY INCREASES PERFECTLY INELASTIC