If we assume that the demand for oil in oil importing countries is nearly vertical, then the economic incidence of oil export tariffs imposed by oil exporting countries mainly falls onto oil consumers in oil importing countries.

Question

Quizplus · Accepted Answer

When the demand for oil in importing countries is inelastic (nearly vertical), consumers are relatively unresponsive to price changes. Therefore, if oil exporting countries impose export tariffs, it will primarily raise the price of oil for consumers in importing countries, as they will absorb most of the cost increase.

If We Assume That the Demand for Oil in Oil