If country A is importing good x from country B where x is produced in a perfectly competitive industry (composed of identical firms), then, in the long run, country A will suffer the entire deadweight loss from any tariff it might impose on imports of x from country B.

Question

Quizplus · Accepted Answer

In a perfectly competitive industry, firms are price takers and cannot influence the market price. Therefore, any tariff imposed by country A will be passed on to consumers in the form of higher prices, and country A will suffer the entire deadweight loss.

If Country a Is Importing Good X from Country B