A note on tariffs, quotas and the Metzler Paradox: An alternative approach
Purchase on Springer.com
$39.95 / €34.95 / £29.95*
Rent the article at a discountRent now
* Final gross prices may vary according to local VAT.
Under the given assumptions, the introduction of an import quota always results in a price increase of the scarce factor. This conclusion confirms that of Falvey  that the Metzler Paradox cannot occur with import quotas. Moreover, we have shown this to be true regardless of the new terms of trade.
The introduction of an import quota will, in general, lead to a lower welfare level. This holds for non-prohibitive protection in those situations in which the terms of trade either remain unchanged or worsen. If the terms of trade improve, a higher welfare level can be attained depending on the degree of the improvement and on the size of the quota. The development of the terms of trade can be used as an indication of the price increase of the scarce factor. The more favourable the new terms of trade for the trade restricting country, the greater the advantage accruing to the scarce factor. The effectiveness of the protective measures for distributional purposes coincides thus with the development of the terms of trade.
- Falvey, Rodney E., “A Note on the Distinction between Tariffs and Quotas”,Economica, Vol. 42, London, 1975, pp. 319–326. CrossRef
- Haan, Werner A. de, andPatrice E. Visser, “Quotas and Equilibrium Relative Prices in the Trade Restricting Country”Economics Letters, Vol. 3, Amsterdam, 1979, pp. 251–255. CrossRef
- Samuelson, P. A., “The Gains from International Trade Once Again”The Economic Journal, Vol. 72, London, 1962, pp. 820–829. CrossRef
- A note on tariffs, quotas and the Metzler Paradox: An alternative approach
Volume 115, Issue 4 , pp 736-741
- Cover Date
- Print ISSN
- Online ISSN
- Additional Links