Tariffs, Export Quotas and Price Fluctuations

Abstract

It has been known in the literature that growth leads to a larger domestic price fluctuation under import quotas than under tariffs. This paper intends to show that the above proposition does not hold between tariffs and export quotas. Growth can lead to a larger domestic price fluctuation under tariffs than under export quotas if the country concerned is a large country and the foreign demand for imports is inelastic.