The Metzler Paradox and the Non‐Equivalence of Tariffs and Quotas: Further Results

Abstract

This article demonstrates that a Metzler Paradox may result from decreasing costs in the domestic import‐competing sector rather than in the foreign export industry, although the allocative implications would differ in the two cases. The article also shows that the non‐equivalence of tariffs and quotas in the presence of domestic monopoly holds even if the protected industry is not small in the world market.