Most policy makers advocate the use of tariffs over quotas because they believe quotas are more trade restricting and have usually adverse implication on international trade and growth of the economy. I would like to know if quotas have any beneficial implications over the use of tariffs and how often such implications are observed.
It depends what an importing country wants to achieve. A quota means that whatever the price, it will not import more than the quota (e.g. 1000 units a year not depending if the price is 1, 100 or 1000), thus, e.g. increasing demand for foreign goods will not lead to increased imports. For exporting countries, quotas are more restrictive for this reason; even if they become more productive/efficient and are able to reduce prices, they can't sell more because of the quota (in case of tariffs, lowering prices in exporting countries or increasing demand in importing countries would enable them to export more). You can also read a bit more about this from http://economics.about.com/cs/taxpolicy/a/tariffs_quotas.htm
Thanks a lot Tiia for the wonderful response and the link..Your point is well noted and your suggestion well appreciated.
The effect of the tariff is included in the price of imports and exports so that if the price is not prohibitive the tariff won't be prohibitive for trade. Inside a quota the price of trade it is supposed to be lower due to the missing tariff. Once a quota is exceeded either trade stops or tariffs apply.