Explore BrainMass
Share

Quotas vs tariff dilemma

This content was STOLEN from BrainMass.com - View the original, and get the solution, here!

Which measure causes the least damage economically and why?

Import quotas vs. Tariffs

© BrainMass Inc. brainmass.com September 20, 2018, 2:53 am ad1c9bdddf - https://brainmass.com/economics/transport-and-agricultural-economics/569420

Solution Preview

Step 1

Import tariffs cause the least damage economically. Importers under a quota system are placed in a monopoly like situation and can gain high profits. When compared with tariffs, under quotas the same restriction produces higher price rise in the home country. There is a theory of tariff-quota equivalence which assumes perfect competition. The theory says that if perfect competition prevails in the market a tariff and import quota are equivalent in the sense that ...

Solution Summary

This solution explains quotas vs.tariffs. The sources used are also included in the solution.

$2.19