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Tariffs and import quotas
Tariffs and import quotas are both harmful to a country’s welfare, though; in some circumstances tariffs are preferable to quotas.” Explain this statement and, in the light of your explanation, discuss why protection has increasingly taken the form of import quotas rather than tariffs.
|language || ||english
|wordcount || ||2073 (cca 5.5 pages)
|contextual quality || ||N/A
|language level || ||N/A
|price || ||free
|sources || ||2
Table of contents
Page 1 Intro
Page 2-3 initial model
Page 4-6 Tariffs
Preview of the essay: Tariffs and import quotas
To explain this statement and evaluate circumstances where tariffs are preferable to quotas, I shall begin by defining what tariffs and import quotas are. I will go on to discuss how they can be harmful to a country’s welfare and then explain circumstances where tariffs are favoured to quotas. I will finally discuss why protection in countries has increasingly taken the form of import quotas as apposed to tariffs. I will also provide a brief conclusion.
A tariff is a tax charged when a good is imported. With specific tariffs there is a fixed charge for each unit of the good imported. With an ad valorem tariff the charge is a fraction of the value of the imported goods. Import quotas are a restriction limiting the quantity of imports in to a country.
To observe how the imposition of tariffs and quotas affect the world price we have to begin by deriving the domestic import demand ...
... cases though I have shown that tariffs can improve a country’s welfare especially in a large country which can improve its terms of trade and earn a net benefit which more than compensates the efficiency loss from the imposition of a tariff. Import quotas tend to be the more preferred option as the cost to individual consumers is quite insignificant and a small amount of producers gain significantly. Most consumers will not realise the imposition of the import quota therefore it can be more effective for governments to use.
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