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In: Economics

If a government decided to afford a domestic industry protection from foreign competition in the form of a voluntary export restraint

If a government decided to afford a domestic industry protection from foreign competition in the form of a voluntary export restraint (bilaterally agreed upon import quotas), is the VER more or less costly to a society than quotas?

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Expert Solution

Yes, VER are more costly to society than quotas. Rathwr if we rank quotas , tariff and VER , then it would be VER to be most costliest followed by quota and then tarrif. VER is more costlier than quotas because exporting country earns the revenue which would have been collected by the government under quotas.

Rahul Sunny answered 2 years ago
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