Consider a model with two countries, France and Germany. France exports wine to Germany, and Germany exports beer to France. In each country, the demand for wine is given by the demand curve Q D = 100 - P W, where Q D is the quantity demanded and P W is the price of wine. In each country, the demand for beer is given by the same demand curve, i.e., Q D = 100 – P B , where Q D is the quantity demanded and P B is the price of beer. The supply of wine in France is given by Q S = 2P W, where Q S is the quantity supplied, and the supply of wine in Germany is given by Q S = P W. The supply of beer in France is given by Q S = P B , and the supply of beer in Germany is given by Q S = 2P B . Suppose the government of France imposes a $10 per unit import tax on beer. Find the world price of beer, the domestic price in France, and the tariff revenue collected by the French government under this policy.
Consider a model with two countries, France and Germany. France exports wine to Germany, and Germany exports beer to France. In each country, the demand for wine is given by the demand curve Q D = 100 - P W, where Q D is the quantity demanded and P W is the
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