Which policy do you think has the largest deadweight losses

Reference no: EM13950138

When the government of Trade land decides to impose an import quota on foreign cars, three proposals are suggested: (1) Sell the import licenses in an auction. (2) Distribute the licenses randomly in a lottery. (3) Let people wait in line and distribute the licenses on a first come, first-served basis. Compare the effects of these policies. Which policy do you think has the largest deadweight losses? Which policy has the smallest deadweight losses? Why?

Reference no: EM13950138

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