Quota Licenses for Imported Capital Equipment: Could Bureaucrats Ever DoBetter than the Market?

Barbara Spencer

No 5695, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Despite valid criticisms, many developing countries have issued non-transferable import licenses to a limited number of final-good producers so as to restrict imports of an input capital equipment. This paper demonstrates that for a given import quota, such licensing restrictions can actually increase domestic production of both the input and the final product, but at the cost of reduced quota rents. Under pure competition, domestic welfare falls relative to the use of marketable quota licenses, but if foreigners would get the quota rents, or if external economies cause decreasing costs, then bureaucratic allocation can dominate.

JEL-codes: F13 (search for similar items in EconPapers)
Date: 1996-08
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published as Journal of International Economics, Vol. 43, nos. 1 & 2 (August 1997): 1-29.

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Journal Article: Quota licenses for imported capital equipment: Could bureaucrats ever do better than the market? (1997)
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