Other things equal, a larger share of a tariff is more likely to be "paid" by the foreign exporting country B rather than the domestic importing country A if

Question

Quizplus · Accepted Answer

A higher share of the tariff will be paid by the foreign exporting country if the supply curve of B's producers is very inelastic, meaning that they are unable to easily reduce the quantity supplied in response to the increased cost of the tariff. This results in B's producers absorbing the majority of the cost of the tariff, rather than being able to shift it onto A's consumers through higher prices.

Other Things Equal, a Larger Share of a Tariff Is