quota question

[bmwhype]

when the domestic gov issues a tariff, it collects money from foreign producers. a quota restricts the imports but does not collect any tax money. then why would government issue a quota rather than a tariff? wy cant they just raise the tariff to a certain level to restrict imports so they can at least collect some money while restricting the imports?

 

[JoeyDVivre]

A tariff is paid by the consumers of the product as a price increase so a tariff is just a selectively applied sales tax visited on the govt's own citizens. Most people wouldn't like their Toyotas to cost $2000 more simply because the govt wants to help domestic auto producers who produce cars that the consumer has rejected as inferior (and hence wants to buy a Toyota). This cost is much more visible than the opportunity cost imposed by a quota.

 

[bmwhype]

thanks.