Creating market power through the use of tariffs or quotas can

Question

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When a country imposes tariffs or quotas on a specific good, it creates market power by limiting the supply of the good that can be imported. This can drive the price of the good up to the monopoly level, as the domestic market becomes more reliant on domestic production or imports from a limited number of trading partners. This can also increase the world price of the good, as demand shifts to other countries with comparative advantages in producing the good. Finally, the government can collect revenue from the tariffs or quotas, which can be used to fund other domestic initiatives.

Creating Market Power Through the Use of Tariffs or Quotas