Learner's Symmetry Theorem (International Economics)

■ Learner's symmetry Theorem

Economist A.P Learner explained -" The ad valorem taxes on export and ad valorem tariff on import will have the same effect.

If tax imposed on export then domestic price of importable good will remain same as world price.

This imposed ad valorem duty on import would lead to increase in import prices but price of same commodity in the world market would be decreased. The optimum export tax exploit the monopoly power of a country in the export good market.

Optimum export tariffs exploits the monopoly power of a country in the import goods market. 

If there's symmetry between subsidy on export and imports, these will reduce importable price and increased volume of export and import.

Both kinds of subsidy in large country will reduce the welfare.

● Effects of tariffs

♢ Effect of tariffs in short run

A tariff impose price of importable goods increases. Capital lobor ratio is constant. Real income shifts from export industry to factor used in import - competing industry.

♢ Effect of tariffs in medium term

Imposition of tariff in meduim term lead to increase in real return of capital to import competing sector and decline in real return to capital to the export sector. The capital labor ratio will decline.

♢ Effects of tariff in long run

Thr imposition of tariff in the long run lead to the real return of abundant factor will fall in thr long run and scarce factor will rise as Sam Stopler Theorem (will be discussed later in upcoming blogs).

The capital labor ratio will increase and the factor of production are mobile.

Thank you

Aditya Pokhrel

MBA, MA Economics, MPA