Dave wrote:
Before I begin, let me say I couldn't agree with you more that tariffs on
sugar, like tariffs on most if not all goods are poor policy and should be
abandoned.


Agreeing with a condemned libby-rull? Wow Dave you're
sliding down in the world.


.... sugar is an good that creates
it's own demand. The more of it people eat, the more they
want, and there is a very high upper limit on that
consumption...


The first sentence is utter nonsense. Nothing creates its own demand.

Well, it's an observable fact. Deny it all you want, doesn't
change a thing.


... What
you mean to say is that the demand curve is relatively flat.

Not at all. If I meant to say that, that's what I would have
said.

... That is,
increasing the price by any given amount has only a small impact on the
quantity demanded.


What you're groping towards is a definition of elasticy vs
inelasticity.

But that's not the case. Refined sugar is a relatively new
product. They've known how to make it for centruies, since
cultivation of cane sugar was known. But it wasn't until
well into the industrial age that people acquired a taste
for it.

Add to this, the huge number of market studies of sugary
foods & drinks... there is no effective upper limit & people
who buy them tend to buy more. In fact, I can think of two
studies I've read the briefs on, wherein families given free
sugary products went out and tripled their purchase of
similar goods immediately after the study ended.

Finally, let me refer you to Say's Law.


Addressing the second point, if sugar sellers could maximize
their profit by reducing prices so as to increase
consumption, why would they lobby to have a tariff barrier
in the first place?


Because the tariff shifts the supply curve by eliminating from the market
those foreign sellers whose marginal cost exceeds the free market price plus
tariff.


But the shift of the supply curve doesn't change the demand,
and it doesn't change the shape of the curve. You're missing
the basic point that the supply curves & demand curves for
sugar... for a population that is accustomed to consuming
it... is not the traditional slightly curved X shape from
Econ 101.



Remember that funny graph with two lines making an X in the middle of it? A
bit old-fashioned, no doubt.

And not particularly accurate in reflecting this particular
situation.


Tell me where I'm wrong.

Wrong? Well, telling me "nonsense" is wrong. But your
description of price effects & demand response is inaccurate.

DSK