why is a production subsidy generally considered a more efficient form of trade protection than an...

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why is a production subsidy generally considered a more efficient form of trade protection than an import quota or an import tariff? explain.

David · Accepted Answer

Q10
http://www.palgrave.com/PDFs/0716799049.Pdf
a.
The area Y represents rents from quota, when import quotas are provided at world price-Pw. The red arrow shows the amounts of imports made with the quota. The area of Y signifies the revenues that can be generated if tariff were used in place of quotas. 
b.
this Y can be seen as the rents that quota holders earn. This encourages rent seeking in the economy , especially since allocation of these quotas is often fraught with corruption, as the rent seeking opportunities that these quotas provide are well known.   
Another way to look at Y is to call it an auction rent. This is the money that government can earn as ’ rent’ if it auctions the quotas to highest bidder. This allows revenues to the state and reduces private rent seeking that is competitive and full of corruption / biases. 
Q7.
a.
 areas are as follows
H=1/2*(8-5)*(15-12) = 4.5
A= ½*(8-5)*(47-43) = 6
F= (8-5)*(15-12) – H = 9-4.5 = 4.5
D= (8-5)*(43-15)= 84
b.
Dead weight loss (DWL)  = H+A =10.

why is a production subsidy generally considered a more efficient form of trade protection than an import quota or an import tariff? explain.

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