Some economists have suggested that the negative welfare effects of quotas can be reduced if we organize auctions in which the state would sell import licenses to potential importers. Which of the following claims on this solution are correct? a. This can function under perfect competition. Then the quota with auction leads to the same welfare implications as a tariff. b. This is true in most situations, therefore this has become a standard rule in the EU. In other words, auctions of quota-related import licenses are quite common in the EU. С. This can function extremely well under imperfect competition because it significantly increases the competitive pressure on domestic dominant companies. d. A potential domestic monopoly would love this solution - it would help a potential monopoly become the real monopoly and increase its profits.

Some economists have suggested that the negative welfare effects of quotas can be reduced if we organize auctions in which the state would sell import licenses to potential importers. Which of the following claims on this solution are correct? a. This can function under perfect competition. Then the quota with auction leads to the same welfare implications as a tariff. b. This is true in most situations, therefore this has become a standard rule in the EU. In other words, auctions of quota-related import licenses are quite common in the EU. С. This can function extremely well under imperfect competition because it significantly increases the competitive pressure on domestic dominant companies. d. A potential domestic monopoly would love this solution - it would help a potential monopoly become the real monopoly and increase its profits.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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