A Rationale for Quota Protection: A Political Economy Approach
This paper provides a political economy rationale for quota protection in declining industries. When the government maximizes a Stigler-Peltzman type political support function, a quota may have a political advantage over a tariff in that the level of the quota, once it is implemented, does not need to change. A tariff, however, requires constant readjustment in order to sustain the same static political-support-maximizing price. This asymmetry in the transparency of protection can make quota protection more appealing to policymakers than the equivalent tariff protection.
Volume (Year): 22 (1996)
Issue (Month): 4 (Fall)
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