MORE ON THE EQUIVALENCE OF TARIFFS AND QUOTAS

Mordechai Kreinin

Kyklos, 1970, vol. 23, issue 1, 75-79

Abstract: Recent discussions in the literature on tariffs and quotas generally conclude that under competitive market conditions the two policy measures are equivalent, while equivalence in one sense or another breaks down with the introduction of monopoly into one or more markets involved in international trade. This paper shows that this is a misleading conclusion, based entirely on the static nature of the analysis. With partial equilibrium tools it is shown that if changes in demand are allowed for, the two measures give different results. The welfare loss from a quota is more severe than that from a tariff. And under certain restricted conditions a quota can be likened more to exchange control than to a tariff.

Date: 1970
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