IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Who Bears the Burden of Voluntary Export Restraints?

Author Info

  • Fuhmei Wang
Registered author(s):

    Abstract

    Conventional wisdom believes that voluntary export restraints (VERs) are beneficial for the exporting country but detrimental to the importing country. Based on the benchmark model of Obstfeld and Rogoff, this paper aims to examine this belief and evaluate the welfare effects of VERs on the world economy. Analytical results find that VERs exert expansion effects on the exporting economy temporarily. The conventional view of VERs effects holds only when there is perfect competition on the goods market or when the exporting country is bigger than the importing country. On the whole, VERs deteriorate the overall welfare of the world economy.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.vse.cz/polek/download.php?jnl=pep&pdf=397.pdf
    Download Restriction: Restriction: free of charge
    File URL: http://www.vse.cz/pep/abstrakt.php?IDcl=397
    Download Restriction: Restriction: free of charge

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by University of Economics, Prague in its journal Prague Economic Papers.

    Volume (Year): 2011 (2011)
    Issue (Month): 3 ()
    Pages: 216-231

    as
    in new window

    Handle: RePEc:prg:jnlpep:v:2011:y:2011:i:3:id:397:p:216-231
    Contact details of provider: Postal: nam. W. Churchilla 4, 130 67 Praha 3
    Phone: (02) 24 09 51 11
    Fax: (02) 24 22 06 57
    Web page: http://www.vse.cz/
    More information through EDIRC

    Order Information: Postal: Editorial office Prague Economic Papers, University of Economics, nám. W. Churchilla 4, 130 67 Praha 3, Czech Republic
    Web: http://www.vse.cz/pep/ Email:


    Keywords: welfare effects; voluntary export restraints; country sizes;

    Find related papers by JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. James Levinsohn & Steven Berry & Ariel Pakes, 1999. "Voluntary Export Restraints on Automobiles: Evaluating a Trade Policy," American Economic Review, American Economic Association, vol. 89(3), pages 400-430, June.
    2. Fender, John & Yip, Chong K., 2000. "Tariffs and exchange rate dynamics redux," Journal of International Money and Finance, Elsevier, vol. 19(5), pages 633-655, October.
    3. Dei, Fumio, 1985. "Welfare gains from capital inflows under import quotas," Economics Letters, Elsevier, vol. 18(2-3), pages 237-240.
    4. Obstfeld, Maurice & Rogoff, Kenneth, 1995. "Exchange Rate Dynamics Redux," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 624-60, June.
    5. Zhou, Dongsheng & Vertinsky, Ilan, 2002. "Can protectionist trade measures make a country better off? A study of VERs and minimum quality standards," Journal of Business Research, Elsevier, vol. 55(3), pages 227-236, March.
    6. Masayuki Okawa, 2004. "Voluntary Export Restraints under Imperfect Competition," Review of International Economics, Wiley Blackwell, vol. 12(1), pages 138-150, 02.
    7. Svetlana Demidova & Andrés Rodríguez-Clare, 2007. "Trade Policy under Firm-Level Heterogeneity in a Small Economy," NBER Working Papers 13688, National Bureau of Economic Research, Inc.
    8. Flam, Harry, 1994. "EC members fighting about surplus VERs, FDI and Japanese cars," Journal of International Economics, Elsevier, vol. 36(1-2), pages 117-131, February.
    9. Anderson, James E, 1985. "The Relative Inefficiency of Quotas: The Cheese Case," American Economic Review, American Economic Association, vol. 75(1), pages 178-90, March.
    10. Roberto A. De Santis, 2003. "Why exporting countries agree to voluntary export restraints: the oligopolistic power of the foreign supplier," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(3), pages 247-263, 08.
    11. Krishna, Kala, 1989. "Trade restrictions as facilitating practices," Journal of International Economics, Elsevier, vol. 26(3-4), pages 251-270, May.
    12. Ono, Yoshiyasu, 1984. "Profitability of export restraint," Journal of International Economics, Elsevier, vol. 16(3-4), pages 335-343, May.
    13. Michael O. Moore, 2005. "VERs and Price Undertakings under the WTO," Review of International Economics, Wiley Blackwell, vol. 13(2), pages 298-310, 05.
    14. Ali M. El-Agraa, 1995. "VERs as a Prominent Feature of Japanese Trade Policy: Their Rationale, Costs and Benefits," The World Economy, Wiley Blackwell, vol. 18(2), pages 219-235, 03.
    15. Jones, Larry E & Manuelli, Rodolfo E & Rossi, Peter E, 1993. "Optimal Taxation in Models of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 485-517, June.
    16. Michael O. Moore & Steven M. Suranovic, 1993. "A Welfare Comparison between VERS and Tariffs under the GATT," Canadian Journal of Economics, Canadian Economics Association, vol. 26(2), pages 447-56, May.
    17. Aw, Bee Yan, 1992. "An empirical model of mark-ups in a quality-differentiated export market," Journal of International Economics, Elsevier, vol. 33(3-4), pages 327-344, November.
    Full references (including those not matched with items on IDEAS)

    The CitEc project has not yet found citations to this item.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Access and download statistics

    When requesting a correction, please mention this item's handle: RePEc:prg:jnlpep:v:2011:y:2011:i:3:id:397:p:216-231. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vaclav Subrta)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.