Session 9 Non-tariff Barriers to Imports

The Effect of an Import Quota under Competitive Condition (Small Importing Country) World Price Import with free trade Quota will increase the supply Domestic price with quota Domestic supply increased by quota Domestic demand decreased by quota Quota Sd +Qq

Gainers and Looser World Price Domestic price with quota Decreased Consumer Surplus Increased Producer Surplus Extended Effect of an Import Quota  Depends on how a nation allocate quota Deadweight Loss Sd +Qq

Ways to Allocate Import Licenses 1.Fixed Favoritism The government simply assigns the licenses to firms (and/or individual) without competition, application or negotiation. The importers can take an advantage by reselling the imports at the higher domestic price. Sd +Qq

2.Auction The government sell import to licenses on a competitive to the highest bidders. The importer and the government take the advantage from the import quota. Sd +Qq

The importer take the advantage from the import quota. The government take the advantage from the import quota.

3.Resource-using Procedures The government sell import to licenses to the importer(s) on the basis of demonstrating need or worthiness; or on the basis of negotiation. The selected importer take the advantage from the import quota.

The importer take the advantage from the import quota. The government take the advantage from the import quota. When the License Also Charged

When the Bribe Play Role With bribe, the importer take the advantage from the import quota. Bribe ( go to individual)

The Effect of an Import Quota under Competitive Condition (Large Importing Country) Initial World Price World Price with quota policy Quota will increase the supply Domestic Price with quota policy Quota Decreased Consumer Surplus Increased Producer Surplus Deadweight Loss Sd +Qq Extended Effect of an Import Quota

Gainer and Looser 1.Fixed Favoritism 2.Auction 3.Resource-using Procedures

Other Non-tariff Barriers 1. Voluntary Export Restraints (VERs)

2. Product Standards Genetically Modified Organism

3. Domestic Content Requirements

4. Government Procurement