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Export Restraints and Horizontal Product Differentiation

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Author Info

  • Boccard, N.

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Center for Operations Research and Econometrics (CORE))

  • Wauthy, Xavier

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) ; Belgian National Fund for Scientific Research (FNRS))

Abstract

We consider the effects of export restraints on price competition in the Hotelling model of horizontal differentiation. We characterize the Nash equilibrium for all possible values of the quota and compare our results with those of Krishna (89). We show that a foreign producer would choose a VER in the vicinity of the Free Trade Equilibrium. In order to maximize domestic welfare, a government would necessarily choose complete protectionism nor Free Trade.

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Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 1997024.

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Length: 19
Date of creation: 01 Jan 1997
Date of revision: 00 Sep 1997
Handle: RePEc:ctl:louvir:1997024

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Keywords: Hotelling; optimal quota; price competition;

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Cited by:
  1. repec:ebl:ecbull:v:6:y:2002:i:1:p:1-6 is not listed on IDEAS
  2. Hernan Vallejo, 2006. "International trade, migration and investment with horizontal product differentiation and free entry and exit of firms," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO.
  3. Xavier Wauthy, 2002. "A note on Research and Development and Voluntary Export Restrictions"," Economics Bulletin, AccessEcon, vol. 6(1), pages 1-6.

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