Title: How to Calculate the Quota Rent | Bizfluent
Headings: How to Calculate the Quota Rent
How to Calculate the Quota Rent
Determining Presence of Quota Rent
Detecting Indirect Quota Rent
Uncovering Hidden Quota Rent
Calculating the Quota Rent

Content: What economists mean by a "rent" is the extra profit a company may extract from a customer because of an agreement that favors the company or for some other reason, such as a lack of competition that gives the company an added advantage. A quota rent is a regulatory restriction on the allowed amount of some good or service that may enter or leave an economic sphere. Often it is intended to produce an economic advantage for one of the parties. For example, the difference between the cost of an auto part in the Chinese domestic market and the actual cost may be the result of an import quota that restricts the supply and allows domestic Chinese manufacturers to charge more than they could in a fully competitive economy. Not all quota rents are straightforward. Some are hidden or indirect, and others are inadvertent. 00:00
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Detecting Indirect Quota Rent
Determine if the goods are affected by an indirect or inadvertent quota rent. While a strict regulatory environment, for instance, protects consumers, it may end up giving the largest corporations a competitive advantage. For example, if the regulations require companies to invest large amounts of capital to begin a wind farm or nuclear power plant, this restricts the number of companies who can engage in nuclear or alternative energy production, limiting competition. A city may regulate taxis to ensure quality of service, but taxi regulation may limit the number of available taxis on city streets.