Several authors have argued that if exporting firms anticipate a voluntary export restriction in a future period, and they expect VERs to be allocated in proportion to past exports, then they have an incentive to dump in the earlier period. In this paper we ask: How does a regime characterized by periodic VERs affect aggregate welfare, consumer welfare and import-competing producer welfare in the importing country: we discover paradoxically, that the answers are all uncertain. However, such a regime always shrinks world-wide efficiency, and normally, for the importer it shrinks aggregate welfare and consumer welfare and raises producer welfare.
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Paper provided by Duke University, Department of Economics in its series Working Papers with number
96-26.
Length: Date of creation: 1996 Date of revision: Publication status: Published in JOURNAL OF ECONOMIC INTEGRATION, Vol. 12, 1997, pages 485-504 Handle: RePEc:duk:dukeec:96-26
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