Reference no: EM133063230

Economists, government policymakers, and many others tend to agree that barriers to international trade reduce world welfare and often the welfare of the countries that impose the barriers. If barriers must be imposed, such experts generally agree that a tariff is superior to quantitative restrictions. Yet quantitative measures to reduce trade have proliferated around the world. Particularly in recent years the so-called voluntary export restraint device, whereby the exporting country, at the request of the importing country, restraints the amount of exports of a product that will be shipped to the importing country. This device seems favored even by the importing country, although it is often thought to have an even less favorable effect on the economy of the importing country than the alternative, whereby the importing country itself impose the quantitative measure. Why is it then that governments tend to opt for the fourth best measure?