A study of selected effects of the quota system for United States apparel imports

The purpose of this study is to attempt to estimate the effect and welfare cost an import quota system has on the U.S. consumer, worker, producer and economy in general. The major objectives of this study were; first, to estimate the import demand function for apparel from Hong Kong, Taiwan, Korea and Japan; special emphasis is placed on Hong Kong considering its position as the largest exporter of apparel to the U.S. A second objective was to estimate price, income, product substitution and cross price elasticities of import demand. Also, to estimate the market share and product share from the apparel exporting nations. The data sources for this study utilized annual publications for the years between 1972 to 1984. All the sources were from published secondary sources. The estimations for the selected statistical models were obtained by utilizing Ordinary Least Square (OLS) regression equations in a Statistical Analysis System (SAS). Some of the variables in the models were in natural numbers and some were transformed to logarithm before running the regressions. The results of the study were acceptable. The coefficient signs were as expected in most of the cases and many were statistically significant. Market share resulting would serve as a good guide to the importance of the apparel exporting countries in the U.S. market. The quota price estimations in 1982 for Hong Kong were high as expected at $151 million, and a distortion effect of $70 million for a total loss to the consumer of $221 million in 1982.