THE (NON-)EQUIVALENCE OF TARIFFS AND QUANTITY RESTRAINTS AS RENT-SHIFTING POLICIES

In a differentiated oligopoly with quantity as the strategic variable, an optimal tariff can lead to a welfare gain. When a quantity restrai nt is used instead, this gain can be offset, since the quota induces a nti-competitive effects. However, alternative quantity restraints, suc h as impart quotas or voluntary export restraints, whether specified i n volume or ratio farm, will influence the strength of the anti-compet itive effect. In this paper we evaluate empirically the degree of non- equivalence between alternative trade instruments and the factors that likely influence it.