A legal limit to the quantity of goods that can be imported over a particular time period. When the government issues a quota, it issues a limited number of import licences. The licences are typically distributed to to governments of exporting countries who then distribute them to exporters. The exporters gain a revenue since they are producing at world price while selling at quota price. Consequently, foreign countries prefer quotas over tariffs.

The effects are similar to Tariffs, except there is no government revenue. Also, there is a new supply curve, which is the previous supply curve plus the quantity imported from the quota.