international policy 1

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  1. How does an import quota differ from a tariff? Can the government ever capture the quota rent? If so, how? 

  1. In discussing the Japanese agreement to limit automobile exports to the United States, economists claim that the total costs of the agreement to the United States constitute primarily transfers to Japan rather than efficiency losses.

    (a) What do they mean by ”transfers to Japan”.

    (b) Would these transfers arise if the U.S. imposed a quota on im- ports of Japanese automobiles rather than negotiating the export restraint agreement? Why or why not? 

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