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Import Quotas, Export Promotion and Intra-Industry Trade

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  • Aditya Bhattacharjea

    (Delhi School of Economics)

Abstract

Most existing models of protection-induced exports, as well as models of intra-industry trade (IIT), are based on imperfect competition in both the home and foreign countries, usually with increasing returns to scale. This paper shows how import quotas can induce exports and IIT in identical or vertically differentiated products, in a model where an oligopolistic domestic industry with increasing costs faces a competitive world market. It also derives welfare results that go beyond the earlier literature, and shows that relaxation of a voluntary export restraint (VER) can reduce welfare relative to autarky over a wide range, with or without IIT.

Suggested Citation

  • Aditya Bhattacharjea, 2001. "Import Quotas, Export Promotion and Intra-Industry Trade," Working papers 96, Centre for Development Economics, Delhi School of Economics.
  • Handle: RePEc:cde:cdewps:96
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    References listed on IDEAS

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    More about this item

    Keywords

    Quotas; voluntary export restraints; export promotion; intra-industry trade; oligopoly.;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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