When Are Voluntary Export Restraints Voluntary? : A Differential Game Approach
AbstractWe revisit voluntariness of voluntary export restraints (VERs) in a differential game model of duopoly with sticky prices. We show that a VER set at the free trade level has no effect on equilibrium under open-loop strategies while the same policy results in a smaller profit for the exporting firm, i.e. it is involuntary under a non-linear feedback strategy. Moreover, we prove an extended proposition of Dockner and Haug (1991) on voluntariness of VERs under a linear feedback strategy.
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Bibliographic InfoPaper provided by School of Economics, Kwansei Gakuin University in its series Discussion Paper Series with number 52.
Length: 17 pages
Date of creation: Apr 2010
Date of revision: Apr 2010
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Other versions of this item:
- Kenji Fujiwara, 2010. "When Are Voluntary Export Restraints Voluntary? A Differential Game Approach," Australian Economic Papers, Wiley Blackwell, vol. 49(2), pages 101-110, 06.
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