In international trade, the quantitative limits placed on the importation of specified commodities. The protection afforded by quotas is more certain than can be obtained by raising import tariffs as the effect of the latter will depend on the price elasticities of the imported commodities. Quotas, like tariffs, can also be used to favour preferred sources of supply. Quotas have virtually disappeared among industrial trading countries, except for primary products. The term also applies to quantitative restrictions on production which may be set by cartels or colluding oligopolists.
|Reference: The Penguin Dictionary of Economics, 3rd edt.|