ABSTRACT
One of the most interesting issues in uncertainty and the theory of international trade is the extent to which traditional commerical policy conclusions can be applied in the new framework. If the ultimate purpose of economics is to understand and improve the economy's generation of welfare, then the ultimate purpose for trade theory should be improvement in the understanding and use of commencai policy. We have taken one step in this direction already in the previous chapter's discussion of the gains from trade. In this chapter we begin a formal discussion of commencai policy. However, because of the particular importance of tariffs in the traditional literature, and to a lesser extent quotas, we devote this chapter to several issues peculiar to tariffs and quotas and continue in the following chapter with a more general discussion of commercial policy.
