Thursday, March 21, 2013

Canada Lowers Sporting Goods Tariffs

The New York Times reports that Canada will reduce tariffs on sporting goods (focus is on hockey equipment).  Currently tariffs are 18%; the tariff is to make sporting goods more competitive with on-line retailers.  As discussed in Prin. of Microeconomics, the reducing in the tariff should increase overall economic welfare (well-being), as consumer's economic well-being increases and domestic producer surplus (well-being) decreases.  As mentioned in the article, there is very few domestic producers, so the fall in producer surplus should be rather small.  While government tax revenues decline, the overall gain to consumers should offset the losses to both the government and domestic producers.

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