Jolly Joygoods JJ is a firm interested in lobbying its gover

Jolly Joygoods (J.J.) is a firm interested in lobbying its government for protection from imports from the foreign underwater nation of Rapture. They have approached you as a consultant to help inform their lobbying strategy. The market segment J.J. is concerned with is one experiencing consistent year-on-year growth.

a. Of a per-unit output subsidy, tariff on imports, or a quota limit on imports, J.J. wants you to rank them by their effectiveness at protecting the firm from foreign competition assuming they can all be implemented. Offer an answer with justification that addresses the effectiveness of each at protecting J.J. from foreign competition in the market segment of concern.

b. Is the most effective protection instrument identified in (a) realistically obtainable and one you would recommend that J.J. pursue? Which of the three instruments, if any, is J.J realistically most likely to be able to obtain? Is there any protectionist measure aside from the three mentioned in (a) which you would recommend J.J. pursue? Please justify all parts of your response.

Solution

Ans

A I will recommend them to lobby for quota. Subsidy can\'t reduce their falling market share. Same is the case with tariff. Tariff would reduce imports but it does not reduce competition due to better quality of imports etc. Similarly subsidy can\'t reduce competition due to better quality of imports. Neither can it address falling market share.Quota leads to definite amount of imports only

B I would recommend quita but it is not realistically obtainable because it is considered unfair due to loss of revenue to Govt etc. Most likely it will be able to obtain tariff as Govt gets revenue in process. I will recommend non tariff barriers because they are effective and involves less sacrifice from Govt. They will further curtail imports in addition to protection provided by tariff. I will also like to have more effective rate of protection than just having a simple tariff.