Economic theory in general, and trade theory in particular are replete with equi

Question

Economic theory in general, and trade theory in particular are replete with equivalencies. For example, it is argued that for any specific tariff one can find an equivalent ad valorem tariff; and that for any quota one can calculate a tariff equivalent. Discuss conditions or situations under which a specific and an ad valorem tariff are not equivalent. Discuss conditions or situations when a tariff and a quota are not equivalent.
please more details?thanks? Economic theory in general, and trade theory in particular are replete with equivalencies. For example, it is argued that for any specific tariff one can find an equivalent ad valorem tariff; and that for any quota one can calculate a tariff equivalent. Discuss conditions or situations under which a specific and an ad valorem tariff are not equivalent. Discuss conditions or situations when a tariff and a quota are not equivalent.
please more details?thanks?
please more details?thanks?

Explanation / Answer

In situations where market changes cause a decrease in imports then tariffs are more effective than a quota. This is a case when domestic demand falls and supply rises or a similar combination occurs. Since protection holds greater importance to the domestic import-competing industries rather than a general economic concern. Since import-competitive industries are more concerned about the increase in imports hence they favor quotas rather than tariffs since quotas will be more protective in this situation.

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