Trade Problem Set 90 3-2

FORUM

1. If a country implements an export subsidy on one of its export goods, it is important for that country to simultaneously implement an import tariff on the same good, even though the good is not being imported.

A. Explain what might happen if an import tariff were not implemented.

B. At what level must the tariff be set? Does it matter?

C. Would an import quota work as well?