6.2.2—Protectionist tools

A tariff is a tax on imports; a quota is a quantity limit; a domestic or export subsidy lowers a producer’s effective cost; an administrative barrier raises the time or compliance cost of importing.

Tariffs generate government revenue, while quotas create quota rents for whoever receives licences. Subsidies use public funds, and administrative barriers may be difficult to measure. All can change domestic price, quantity and welfare in different ways.

A binding quota fixes the import quantity even if domestic demand rises; a tariff instead lets imports respond to demand while the tax wedge remains, so their diagrams and incidence differ.

Do not treat every barrier as a tariff: revenue, rent ownership and quantity response depend on the instrument.