Quota Use under VERs: A theoretical framework and some evidence on MFA quota use
AbstractIn this paper, we propose a framework to study quota use under Voluntary Export Restraints (VERs). Our model unifies three strands of literature in finance and international trade policy research: the equivalence between tariff and quotas/VERs, option pricing, and option exercise. We also present evidence on quota utilisation rates for clothing exports under the Multi-Fibre Arrangement (MFA) from the most important Asian suppliers to the EU.
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Bibliographic InfoPaper provided by Department of Economics, School of Management and Languages, Heriot Watt University in its series Working Papers with number E03.
Date of creation: 2004
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More information through EDIRC
VERs; quota use; option-pricing; first passage time;
Find related papers by JEL classification:
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
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