... substitution policy involves "erecting various barriers to the importation of foreign goods and substituting for these goods by producing them domestically"1. There are many forms of import substitution from complete bans on the importation of certain products to discriminatory treatment for domestic producers of certain products. A combination of tariffs and quotas often plays the major role in a policy of domestic protection. A tariff is simply a percentage fee that is charged by the government on imports (in general or on specific items), hence raising the observed price of these goods to domestic consumers, whilst also raising revenue for the government. A quota on the other hand is a maximum quantity of a particular good that is permitted to be imported. It is often the case that a tariff and quota may be combined with a tariff being charged on imports until some given quantity after which all further ...

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