New study shows tariffs protect domestic agents from import competition!
The article discusses how tariffs can be used by the government to protect domestic agents from import competition when there is incomplete information about them. The researchers used a model where agents have private information about their resources to find the best government policy that ensures everyone benefits from trade. They found that the optimal policy involves using nonlinear tariffs, which don't completely bring prices back to their original levels but still make some individuals better off than before.