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Suppose a tariff is imposed on foreign goods and then the revenue from the tariff is given back to the domestic consumers as lump sum
Suppose a tariff is imposed on foreign goods and then the revenue from the tariff is given back to the domestic consumers as lump sum income. For a tariff and lump sum income combination that breaks even how does the final level of utility of domestic consumers with the tariff compare to the level of utility without? Would the utility be higher or lower with the tariff? Or can it go either way?
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