These two measures also have different implications for government revenue: with tariffs, importers of the taxed products have to make payments to the government with quotas, no one has to explicitly make a payment to the government - and the importers that get to import the products under the quota system capture this rent. Tariffs directly make imported products more expensive by adding a tax on them, and quotas directly reduce the quantity of imports by limiting how many of them can come into the country. However, tariffs and quotas work in different ways. Difference between tariffs and quotasīoth tariffs and quotas increase the equilibrium price and decrease the equilibrium quantity in the domestic market, compared to free trade. When the government imposes a quota on a product, it tells importers that they can only import up to this amount of that product into the country. The government often charges tariffs as a percentage of the imports' value, and the tariffs are paid by the importers. Price Determination in a Competitive Market.Market Equilibrium Consumer and Producer Surplus.Determinants of Price Elasticity of Demand.Cross Price Elasticity of Demand Formula.Effects of Taxes and Subsidies on Market Structures.Monopolistic Competition in the Short Run.Monopolistic Competition in the Long Run.Behavioural Economics and Public Policy.
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