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Voluntary Export Restraints, Dumping and Excess Capacity

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  • Marchionatti, Roberto
  • Usai, Stefano

Abstract

This paper is a variation on Anderson (1992), who asserts that the prospect of VER protection, inducing firms to dump, can create further protection. Anderson's model, however, seems unable to explain some stylised facts concerning the VER-regulated trade in textile and clothing. The authors' aim is to account for such stylised facts through the introduction of a cost of excess productive capacity attributed to dumping actions. This allows one to describe a new chain of effects related to dumping and VER: the incentive to dump, induced by the expectation of a VER, can generate the creation of productive excess capacity in the present period, which in turn can increase the incentive to dump in the future. Copyright 1997 by Blackwell Publishers Ltd and The Victoria University of Manchester

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Bibliographic Info

Article provided by University of Manchester in its journal The Manchester School of Economic & Social Studies.

Volume (Year): 65 (1997)
Issue (Month): 5 (December)
Pages: 499-512

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Handle: RePEc:bla:manch2:v:65:y:1997:i:5:p:499-512

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Cited by:
  1. Arijit Mukherjee, 2002. "Capacity Commitment and Licensing," Keele Economics Research Papers KERP 2002/05, Centre for Economic Research, Keele University.
  2. Aniruddha Bagchi & Arijit Mukherjee, 2011. "Commitment and excess capacity with licensing: an old debate with a new look," Journal of Economics, Springer, vol. 103(2), pages 133-147, June.

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