If imports licenses are auctioned off to domestic importers in competitive market their scarcity value (revenue effect) accrues to ?
Correct answer: D. The domestic government
- A. foreign corporations
- B. foreign workers
- C. domestic corporations
- D. The domestic government
Explanation
When import licences are auctioned competitively, the scarcity rent is captured by whoever sells the licences. Since the government conducts the auction, this revenue accrues to the domestic government rather than importers.
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