Environmental & Natural Resource Economics 10th Edition by Thomas Tietenberg,Lynne Lewis

Exercise 2

Economist Abba Lerner once proposed that the United States impose a tariff on oil imports equal to 100 percent of the import price. This tariff is designed to reduce dependence on foreign sources as well as to discourage OPEC from raising prices (because, as a result of the tariff, the delivered price would rise twice as much as the OPEC increase, causing a large subsequent reduction in consumption). Should this become public policy? Why or why not?