Small country quota Suppose Canada places a quota on the import of steel, which reduces its...

Small country quota

Suppose Canada places a quota on the import of steel, which reduces its steel imports, but does not stop them completely.

a) Draw a diagram to illustrate the change in Canada’s steel market, moving from free trade to the quota.

b) Based on your diagram, compare Canada’s welfare if it distributes the quota by auction with Canadian welfare if the quote is distributed by a VER.

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Expert Solution

Rahul Sunny answered 1 year ago

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