Factors Affecting The Biodiesel Industry

A on international economics there are various methods used by governments to restrict the flow of international trade in order to create trade protection. Trade protection has government intervention in international trade with the impositions of some barriers, that prevent the free entry of imports or to protect the domestic economy of a country.

The article is about how the United States department of commerce is imposing a tariff on Argentinean biodiesel of the 71% to 72% depending on the price. This is being done because the argentinean producers has been accused of dumping, this affecting the biodiesel industry.

A tariff is a tax that is imposed on an imported good,

There is a global and domestic misallocation of resources because there is a switch between the efficient argentinean producers which had a comparative advantage to the more inefficient U.S domestic producers. Also there is an increment in production inefficiency because the U.S producers have to increase the production which can not put up with. The domestic income distribution worsens since there is a negative impact because the tariff is a regressive tax that as income increases, the fraction of income paid as taxes decreases; so there is a decreasing tax