What do you understand by the term `Removal of Quantitative Restrictions’ and what are their implications?
quantitative restrictions are quotas, this is different then tariffs. A quota restricts the amount of a good that can be sold. Normally this deals with imports but can be anything. Removing of a quota increases the supply of a good if the world price is below domestic price which is normally the case. If nothing is put in to replace the quota then the result is lower price to the consumer, some domestic firms will be hurt. The firms hurt are the ones least efficient in that their marginal costs are to high to continue to sell the good at the lower price. This forces the inefficient firms to become more efficient or close down.
winners - domestic consumers , foreign suppliers, and maybe most efficient domestic producers ( if they can differentiate their product).
losers - inefficient domestic firms (this includes their workers and owners)
no restrictions on the amount but what is the context?
I think it quantitative restrictions is related to tariff on products being imported by a country. It is an economic tool used to balance your exports and imports. With quantitative restrictions imposed on certain products or services, it then becomes expensive for this country to buy or avail of such product or service. Thus, maintaining the quantity of import to a healthy level and prevent it from competing against domestic suppliers or service providers.
The implications would be if such is removed is the domestic market will open up to foreign investor thus directly competing against local providers. This is the effect of Globalization.
A country is mandated to remove QR (i think) once they have reached a good balance of payment. If the locals are not ready for this, many small businessmen will feel the effect of the removal of QR.
The answers post by the user, for information only, FunQA.com does not guarantee the right.
More Questions and Answers: