If the united states paid exporters a subsidy

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What would happen to world welfare if the United States paid exporters a subsidy of $5 for every pair of blue jeans they sold to Canada, but Canada charged a $5 countervailing duty on every pair imported into Canada?

Would the United States gain from the combination of the export subsidy and import tariff? Would Canada? Explain. (In your answer, assume that the blue jeans market is perfectly competitive.)

Reference no: EM131212614

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