A domestic monopoly producing a close substitute of an imported product would prefer to be protected by a quota than a tariff that results in the same amount of imports because:

Question

Quizplus · Accepted Answer

With a quota, the domestic monopoly can restrict the amount of imports and charge a higher price, leading to higher profits. With a tariff, the price of the imported good may still be lower than the domestic substitute, leading to less profit for the monopoly. The deadweight loss and government revenue are not relevant factors in this scenario.

A Domestic Monopoly Producing a Close Substitute of an Imported