Costs and Benefits of Import Quotas Name Institution Costs and Benefits of Import Quotas Background Information A quota is a quantitative restriction by a government on specific product imports. The government intervenes for a couple of reasons. In 1980 the United States of America government imposed quotas on the importation of used vehicles from Japan after the automakers made losses on sales of new cars totaling$4 Billion which was 23.2 percent way below all manufacturing averages (Dinopoulos & Kreinin 1988). The losses were attributed to the many regulations imposed by the federal government fumes ban as well as the high fuel costs. The move was to safeguard local manufacturers from undue competition from imported automobiles and to save the industry from losses (McGee 1992). The Japanese manufactures accepted to comply with the (VER)-Voluntary Export Restraint and limit their exports to the U S market. This government protectionism had various as well as compromise in the quality of products. Whereas the US industries were busy enjoying their monopoly their Japanese counterparts were focusing on producing quality automobiles for international markets. For the past 35 years us auto industries have been having continued instability since the fundamental issues were not addressed. References Cutcher-Gershenfeld J. Brooks D. & Mulloy M. (2015). The Decline and Resurgence of the US Auto Industry. EPI Briefing Paper (399). Dinopoulos E. & Kreinin M. E. (1988). Effects of the US-Japan auto VER on European prices and on US welfare. The Review of Economics and Statistics 484-491. McGee R. W. (1992). An economic analysis of protectionism in the United states with implications for international trade in Europe. Geo. Wash. J. Int'l L. & Econ. 26 539. Scott R. E. (2017). Short Sighted Solutions: Trade and Energy Policies for the US Auto Industry (Vol. 7). Taylor & Francis. [...]
In 1980, automobile manufacturers in the United States asserted that import quotas be instituted on foreign-produced vehicles marketed in the United States. In a critical essay, elaborate on the costs and benefits of this policy and approach. Is the policy in effect? How have non-US manufacturers responded? Summarize the effects and discuss the trends of the past 35 years. Support your findings with additional academic references. Directions: Your essay should be at minimum five-pages in length, which does not include the title page, abstract, or required reference page, which are never a part of the content minimum requirements. Support your submission with course material concepts, principles, and theories from the textbook and at least three scholarly, peer-reviewed journal articles. Use the Saudi Digital Library to find your resources. Use Saudi Electronic University academic writing standards and APA style guidelines.