Quotas, taxes or subsidies can provide constraints on the ability of specific suppliers or technologies to change their capacity in response to changes in demand.
The forced phasing out of specific polluting technologies may render these unavailable to changes in demand. Regulatory constraints typically take the form of minimum or maximum quotas on the process or any of its exchanges. Wild-catch fishery is an example of an activity constrained by quotas world-wide, reflecting an underlying resource scarcity. Product quotas are also common within the EU agricultural policy, where e.g. such products as milk and sugar are regulated by quota systems, as an indirect income subsidy for the farmers.
Taxes and subsidies may also constitute constraints on specific producers. An example is the negligible import of cereal grains to the EU, because of a very high import tax. Similarly, the farmers’ choice of crops is strongly dependent upon the level of subsidies given for different crops, virtually imposing a constraint on crops less subsidised.
Quotas, taxes or subsidies that are exclusively politically motivated, and not reflecting an underlying resource constraint, are often temporary and may in some situations be influenced by changes in demand. It is therefore recommended to apply a sensitivity analysis to constraints based on such political regulation.