Question

What are import quotas? Why do some governments use them instead of just using tariffs to restrict imports by the same amounts? Is it because quotas bring a bigger national gain than tariffs?

Answer 1

Import quota is a restriction on the quantity of imports.

It is chosen over tariff mainly where domestic market is price inelastic in terms of demand for that good , That is they don't mind paying a higher price.

If imports reduce Due to the quota, domestic price rises for the good. By licensing importers government can capture this benefit otherwise there is high private profit. Either case the domestic economy gains. Producer surplus will also be more comparatively