The port of Rhodes (of the famed Colossus of Rhodes) was a major trading hub during the Roman Republic, charging a small harbor tax on goods that passed through. When Rome fought Macedonia, Rhodes took a neutral stance much to Rome's chagrin. In response, Rome established a rival port on the nearby Isle of Delos and eliminated the harbor tax. Trade in Rhodes immediately fell by 85% and eventually the city-state disappeared forever. Why did Rome completely eliminate the tax instead of charging one just below what Rhodes charged?
A) to make consumers open to a new competitor
B) to remove a legal barrier to entry
C) to destroy Rhodes's excellent ports
D) to reduce the fixed cost of entry

Question

Quizplus · Accepted Answer

By eliminating the tax, Rome made the new port on Delos more attractive to traders, encouraging them to switch from Rhodes to Delos, thus undermining Rhodes's economic advantage and competitiveness.

The Port of Rhodes (Of the Famed Colossus of Rhodes)