Optimal Tariff 1
P = a - bQ (Q = Home demand)
P = c + fQ (Q = Home supply)
P = g + hQ (Q = Foreign export supply)
a
c
g
Opt Tariff
b
f
h
Domestic Welfare Gain
Price (Home)
Price (World)
Price (Free)
Producer Gain
Demand (Home)
Supply (Home)
Import Volume
Consumer Loss
Demand (Home) (no tariff)
Supply (Home) (no tariff)
Import Volume (no tariff)
Tariff Revenue
by Peter Lohmander 2002-09-25