Remembering the Optimum Tariff Analysis of Chapter 15, Explain Why

question 12

Essay

Remembering the optimum tariff analysis of Chapter 15, explain why it might be possible that the imposition of a tariff by an LDC to improve its terms of trade (and thus hopefully to be in a better position at the start of any future deterioration) could reduce the LDC's welfare. Build the reverse case that reduction of an LDC tariff might improve the LDC's welfare at the present time, even though the terms of trade deteriorate because of the tariff reduction.

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Definitions:

Rousseau

Jean-Jacques Rousseau, an 18th-century philosopher known for his influence on the Enlightenment in France and across Europe.

State of Nature

A philosophical concept describing the hypothetical condition of humanity before the establishment of society and laws.

Legitimate Political Power

Authority or power in political systems that is recognized as right and proper, often established through laws, social norms, or consensus.

Might Makes Right

The idea that, when determining who has legitimate power to govern a society, those who are the strongest or otherwise superior should (or inevitably will) rule. In effect, this is to claim that the person who is strong enough to hold on to ruling authority has legitimate power merely by virtue of being strong enough to retain power.