250 ECONOMIC PRINCIPLES
examination. The reduction of supplies in that market
would tend to raise prices there somewhat, till a point was
reached where the diversion of further amounts to other
markets could not be profitably made,
If we started with the assumption that the effect of the
duty was a rise in price equal to the duty in amount, similar
conclusions would be reached. The rise of price would both
check consumption and stimulate the offer of domestic
goods at the raised price. The check in consumption would
be felt by the foreign producers, who would probably seek
to meet it by some concession in price. That concession
would decrease the profit of this special market for the
goods, and lead to a withdrawal of part of its supplies, to
be distributed to other markets, rather than submit to a
concession great enough to restore the old volume of trade,
for this would mean shouldering the whole burden of the
duty.
In the light of these considerations, it seems that the
immediate result of the duty must be a rise of price by
something less than the duty, but a rise nevertheless. The
burden of the duty would thus be shared between the
foreign producers and the consumers in the protected
market. The conditions for the placing of the whole burden
on the one or the other may be examined. If the producer
(using this term to cover all the interests concerned with the
goods up till the time of reaching the boundary line where
the duty is exigible) bear the whole, we must conclude that
it is less profitable, either to reduce production or to place
some of the goods on other markets, than to submit to the
entire burden of the duty. The protected market would
thus contain the body of consumers of greatest importance,
and these might be said to have a kind of monopoly of the
demand for the commodity. Further, the ordinary net
profit on the production of the commodity would need to
exceed the sum of the duty and transportation costs from
the place of production to the market in question. If it did
not, reduction of production would involve a smaller loss
than the entire burden of the duty. If, on the other hand,
the consumer bear the whole burden, we need to suppose