Note also, that with or without tariffs, there is no incentive

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Note also, that with or without tariffs, there is no incentive

Post by jancancook on Sun Nov 06, 2011 7:28 pm

Note also, that with or without tariffs, there is no incentive to buy the imported goods over the domestic, as the price of each is the same. Only by altering available purchasing power through debt, selling off assets, or new wages from new forms of domestic production, will the imported goods be purchased. Or, of course, if its price were only a fraction of wages.[citation needed]
In the real world, as more imports replace domestic goods, they consume a larger fraction of available domestic wages, moving the graph towards this view of the model. If new forms of production are not found in time, the nation will go bankrupt, and internal political pressures will lead to debt default, extreme tariffs, or worse.[citation needed]
Establishing tariffs inefficiently slows down this process at the expense of the consumer's real wages, allowing more time for new forms of production to be developed, but also buttresses industries which may never regain competitive prices.[citation needed]


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