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Import Controls On Foreign Oil: Reply, George A. Hay

George A. Hay

The position of Ryan Amacher, Robert Tollison, and Thomas Willett (ATW) can be summarized as follows: Assuming that the domestic industry behaves like a profit-maximizing monopoly, if the quota on imported crude oil is replaced by a tariff that is by assumption set so as to achieve the same domestic price of crude oil, the market power of the dominant domestic firms is "severely constrained." In response I would contend that 1) their assumption about the level of the tariff differs from what I had assumed; 2) their conclusion about the market power of the dominant firms is subject to …