Download or read book Trade Policy and Market Structure Interactions in Developing Countries written by International Monetary Fund and published by International Monetary Fund. This book was released on 1989-10-27 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper shows that the presence of quotas on imported inputs that are based on installed capacity can lead to capacity underutilization in manufacturing industries of developing countries. A replacement of such quotas, by tariffs leads to full capacity utilization under assumptions of both perfectly and imperfectly competitive markets. Furthermore, such a policy also eliminates strategic advantages for oligopolistic firms that arise in quota-based regimes.