Tariff
A tariff is a tax on imports or exports between sovereign states. It is a form of regulation of foreign trade. It is a policy that taxes foreign products to encourage or protect domestic industry. It helps limit trade deficits. The tariff is historically used to protect infant industries and to allow import substitution industrialization.
Feed-in tariff
A feed-in tariff can differentiate on the basis of marginal cost. This is a theoretical alternative which is based on the concept of price differentiation (Finon). Under such a policy the tariff price ranges from some level slightly above the spot rate to the price required to obtain the optimal level of production determined by the government. Firms with lower marginal costs receive prices on the lower end of the spectrum that increase their revenue but not by as much as under the uniform feed-in tariff. The more marginal producers face the higher tariff price. This version of the policy has two objectives. The first is to reduce the profitability of certain production sites.