ENTRY AND IMPORT QUOTA

Ming Fang Tsai, Jiunn Rong Chiou

Research output: Contribution to journalArticlepeer-review

Abstract

An import quota set stricter than the free trade level is quite common for the domestic entry protection. However, this paper shows that as the products are vertically differentiated, an import quota that is simply set at the original free trade level could be effective on entrant protection. This quota policy also improves both consumer surplus and total domestic welfare, which is in sharp contrast to the implications of existing literature. Our result suggests that an import quota has a stronger protection effect on domestic production if the domestic and foreign products are vertically differentiated.

Original languageEnglish
Pages (from-to)229-239
Number of pages11
JournalBulletin of Economic Research
Volume69
Issue number3
DOIs
StatePublished - Jul 2017

Keywords

  • entry
  • quality
  • quota
  • vertical differentiation

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