Review of World Economics

, Volume 115, Issue 4, pp 729–735 | Cite as

The choice between a tariff and a quota under uncertainty

  • Claus Vastrup
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Conclusions

The results concerning the choice between a tariff and a quota under the assumption of perfect competition and three kinds of uncertainty are summarized in the table.

An analysis of the uncertainty, under which a government using a tariff or a quota can determine the value of imports or the quantity domestically supplied (i.e. employment), gives neither the same result for the two instruments (equivalence) nor the same result for the three situations considered. Therefore the choice between a tariff and a quota in case of uncertainty depends on the purpose, and whether the initial uncertainty concerns domestic demand, foreign or domestic supply. This conclusion corresponds to the well-known phenomenon that in case of a disturbance to an open economy the choice between a change in the rate of exchange and a change in the demand policy depends both on the goal and on the kind of disturbance.

Keywords

Monetary Policy Price Elasticity Demand Curve Domestic Demand Supply Function 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
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References

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Copyright information

© Institut fur Weltwirtschaft an der Universitat Kiel 1979

Authors and Affiliations

  • Claus Vastrup

There are no affiliations available

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