Production quota
Encyclopedia
A production quota is a goal for the production
Production, costs, and pricing
The following outline is provided as an overview of and topical guide to industrial organization:Industrial organization – describes the behavior of firms in the marketplace with regard to production, pricing, employment and other decisions...

 of a good. It is typically set by a government or an organization, and can be applied to an individual worker, firm, industry or country. Quotas can be set high to encourage production, or can be used to limit production to control the supply of goods. The aim of restricting supply is to maintain a certain price level.

On 16 June 1953, a production quota increase of 10 percent for workers building East Berlin
East Berlin
East Berlin was the name given to the eastern part of Berlin between 1949 and 1990. It consisted of the Soviet sector of Berlin that was established in 1945. The American, British and French sectors became West Berlin, a part strongly associated with West Germany but a free city...

's new boulevard, the Stalinallee (today known as Karl-Marx-Allee
Karl-Marx-Allee
The Karl-Marx-Allee is a monumental socialist boulevard built by the GDR between 1952 and 1960 in Berlin Friedrichshain and Mitte. Today the boulevard is named after Karl Marx....

), resulted in demonstrations and the uprising of 1953 in East Germany
Uprising of 1953 in East Germany
The Uprising of 1953 in East Germany started with a strike by East Berlin construction workers on June 16. It turned into a widespread anti-Stalinist uprising against the German Democratic Republic government the next day....

.

Criticism

Quotas, like other trade restrictions, are used to benefit the producers of a good at the expense of all consumers in that economy.
Possible effects are corruption
Political corruption
Political corruption is the use of legislated powers by government officials for illegitimate private gain. Misuse of government power for other purposes, such as repression of political opponents and general police brutality, is not considered political corruption. Neither are illegal acts by...

 PCC for short (bribes to get a quota allocation) or smuggling
Smuggling
Smuggling is the clandestine transportation of goods or persons, such as out of a building, into a prison, or across an international border, in violation of applicable laws or other regulations.There are various motivations to smuggle...

 (circumventing a quota)
They are thought to be less economically efficient than tariff
Tariff
A tariff may be either tax on imports or exports , or a list or schedule of prices for such things as rail service, bus routes, and electrical usage ....

s which in turn are less economically efficient than free trade
Free trade
Under a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from...

.

Examples

  • Oil production by OPEC
    OPEC
    OPEC is an intergovernmental organization of twelve developing countries made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. OPEC has maintained its headquarters in Vienna since 1965, and hosts regular meetings...

  • Common Agricultural Policy
    Common Agricultural Policy
    The Common Agricultural Policy is a system of European Union agricultural subsidies and programmes. It represents 48% of the EU's budget, €49.8 billion in 2006 ....

     by the European Union
    European Union
    The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...


External links

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