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VERs and Price Undertakings under the WTO

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  • Michael O. Moore

Abstract

Under the rules of the WTO, governments are prohibited from negotiating voluntary export restraints (VERs) but may negotiate price undertakings (i.e. import price minima). While these two policies can have identical effects in models of perfect competition, they can have very different economic consequences with imperfect competition. The model presented here shows that in a model of international Bertrand duopoly, a VER can result in lower domestic prices and profits than a price minimum regime. This suggests that price undertakings should also be prohibited under the WTO. Copyright Blackwell Publishing Ltd 2005..

Suggested Citation

  • Michael O. Moore, 2005. "VERs and Price Undertakings under the WTO," Review of International Economics, Wiley Blackwell, vol. 13(2), pages 298-310, May.
  • Handle: RePEc:bla:reviec:v:13:y:2005:i:2:p:298-310
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    Cited by:

    1. Fuhmei Wang, 2011. "Who Bears the Burden of Voluntary Export Restraints?," Prague Economic Papers, University of Economics, Prague, vol. 2011(3), pages 216-231.
    2. Wu, Shih-Jye & Chang, Yang-Ming & Chen, Hung-Yi, 2014. "Antidumping duties and price undertakings: A welfare analysis," International Review of Economics & Finance, Elsevier, vol. 29(C), pages 97-107.
    3. Chad P. Bown & Rachel McCulloch, 2012. "Antidumping and Market Competition: Implications for Emerging Economies," Working Papers 50, Brandeis University, Department of Economics and International Businesss School.
    4. Morkre, Morris & Spinanger, Dean & Tran, Lien, 2008. "Are unfair import laws unfair to developing countries: evidence from US antidumping actions 1990 - 2004," Kiel Working Papers 1438, Kiel Institute for the World Economy (IfW).
    5. Michael Owen Moore, 2011. "Argentina: There and Back Again?," Working Papers 2011-06, The George Washington University, Institute for International Economic Policy.
    6. Martin Theuringer & Pia WeiƟ, 2001. "Do Anti-Dumping Rules Facilitate the Abuse of Market Dominance?," IWP Discussion Paper Series 03/2001, Institute for Economic Policy, Cologne, Germany.
    7. Jota Ishikawa & Kaz Miyagiwa, 2006. "Price Undertakings, VERs, and Foreign Direct Investment," Emory Economics 0616, Department of Economics, Emory University (Atlanta).

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