Trade Quota

Trade quotas are not the same as customs or tariffs which are taxes placed on exported or imported goods and services leaving or entering a country but place no limits on quantities traded. Quotas are more effective in restricting trade than tariffs particularly if domestic demand for a.

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Quotas are different from tariffs or customs which place taxes on imports or exports.

Trade quota. Thus we will have to make a choice between a tariff and a quota. Governments impose both quotas and tariffs as protective measures to try to control trade. Cloth is the exportable commodity and steel is the importable commodity of the quota imposing home country a.

Finally a quota has the tendency to distort international trade much more than tariffs since its effects are more vigorous and arbitrary. A tariff is usually considered a less objectionable method of trade restriction than an equivalent quota. The terms of trade effect of import quota can be explained through fig.

Quota in international trade government imposed limit on the quantity or in exceptional cases the value of the goods or services that may be exported or imported over a specified period of time. Oa is the offer curve of country a and ob is the offer curve of foreign country b. However both tariffs and quotas are protective measures that governments impose in their attempt to improve their country s balance of trade.

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