3 ms·

Why wouldn’t they have competition?

• geysersam 1y ago
  Even if you assume perfect competition costs like tariffs can be passed back to producers. Imagine a demand and a supply curve. From the perspective of a producer outside the country the tariff effectively shifts the demand curve, but doesn't affect supply. That's going to lead to a lower price at equilibrium. Of course, from the perspective of the consumer it's the opposite situation, the supply curve shifts which leads to a higher price at equilibrium. Both happen simultaneously, who pays most of the tariff depends on the elasticity of the supply and the demand