Export Restraints and Horizontal Product Differentiation
We consider the effects of export restraints on price competition in the Hotelling model of horizontal differentiation. We characterize the Nash equilibrium for all possible values of the quota and compare our results with those of Krishna (89). We show that a foreign producer would choose a VER in the vicinity of the Free Trade Equilibrium. In order to maximize domestic welfare, a government would necessarily choose complete protectionism nor Free Trade.
|Date of creation:||01 Jan 1997|
|Date of revision:||00 Sep 1997|
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