In a three-country generalization of the Kreps-Scheinkman (1983) duopoly model with price competition and capacity constraints, the author analyzes the effects of discriminatory voluntary import expansions and voluntary export restraints on equilibrium capacity and pricing decisions. Voluntary export restraints are shown to be bad for the exporting country, contradicting recent results in the literature by R. Harris (1985) and K. Krishna (1989). Voluntary import expansions are shown to decrease competition. Cases are analyzed where voluntary import expansions may actually lead to import contraction or to increases in efficiency in the home country.
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Kala Krishna & Suddhasatwa Roy & Marie Thursby, 1996.
"Implementing Market Access,"
NBER Working Papers
5593, National Bureau of Economic Research, Inc.
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Other versions:
Krishna, K & Thursby, M & Roy, S, 1996.
"Implementing Market Access,"
Papers
96-011, Purdue University, Krannert School of Management - Center for International Business Education and Research (CIBER).
Krishna, K & Roy, S & Thursby, M, 1996.
"Implementaing Market Access,"
Papers
96-003, Purdue University, Krannert School of Management - Center for International Business Education and Research (CIBER).