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International Trade in Modern Principals of Economics by Tyler Cowen/Alex Taba

International Trade in Modern Principals of Economics by Tyler Cowen/Alex Taba

Challenge Question 1 of Chapter 9: International Trade in "Modern Principals of Economics" by Tyler Cowen/Alex Tabarrok (2nd Edition)....
Part C: The sugar quota is allocated to importing countries based on imports from these countries between 1975 and 1981. For example, in 2008 Australia was given the right to export 87 thousand metric tons of sugar to the U.S. at a very low tariff rate, while Belize was given the right to export 11.5 thousand metric tons of sugar to the U.S. at a very low tariff rate. How do you think these rights are allocated to firms within the sugar-exporting countries?
Part D: Discuss how the quota and the way it is allocated could create a misallocation of resources that would further reduce efficiency relative to a tariff that resulted in the same quantity of imports.

Johnson 10-Nov-2017

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