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Edited by William A. Kerr and James D. Gaisford
Chapter 24: Quota Administration
David Skully Introduction Quota administration concerns how the rights to import within a quota are distributed. Quota administration is fundamentally a rationing problem. There are many ways to ration, some are more eﬃcient than others. There are three general types of quota administration: market-based or auction allocation, rule-based allocation, and discretionary allocation. This chapter ﬁrst considers the superior eﬃciency of market-based allocation; that is, rationing a ﬁxed supply among competing demands by market-determined prices, either auction bids or market-clearing prices. Market allocation provides the benchmark against which to evaluate other allocation methods. Rule-based methods can be reduced to algorithms. The most common rule-based systems are license on demand and ﬁrst-come-ﬁrst-served. Historical allocation, in which quota rights are allocated based on some characteristic in an ‘historical’ base period, for example, a country’s average market share in a given three-year period, is a rule-based system; but it has a discretionary element because one must choose among characteristics, base periods, and averaging methods. Discretionary methods cannot be reduced to rules or algorithms. In such a system the quota administrator is not constrained to follow an explicit (or, at any rate publicly available) rule. The allocation can be arbitrary. Often discretionary allocation involves the government of the importing country granting quota administration powers to some private or non-governmental organization. Finally, it should be noted that quotas are sometimes not enforced. The standard treatment of a quota is a trade restriction imposed unilaterally by the government of the importing country that prevents...
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