Quotas Import

Quotas (Import):

An import control which places a fixed limit on the quantity of the good which can be imported. The objective is usually to protect domestic producers. The supply of the imports will be reduced and the price will usually rise.

The more inelastic the demand for the imported product, the more the price is likely to rise. Above the level of the quota, the supply is fixed and the price is demand determined (see diagram overleaf).

A common form of quota is the voluntary export restraint (VER) ; these have been placed on imports of cars, electronic goods and steel to the EU and the USA from the Far East.

Quotas are strongly discouraged by the WTO but are nevertheless widespread in some product areas. This is because there has been support in recent years for protectionist policies on the grounds that they may save jobs. In reality it is likely that the loss of output caused by the restraint on trade is more serious for standards of living than the loss of jobs.

quotas import

 
The effect of a quota

02/12/2020

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