VER as Strategic Trade Policies
Literature about strategic trade policy (Brender, Krugman,...) has been concerned only with implicit internal strategic trade policies. We define them as policy tools targeting exclusively the behavior of national firms. In duopolistic terms, the goal is to move the reaction function of the domestic firm and to locate it in a better position than previously. The home country government must credibly commits itself to pursue a particular trade policy before firms make decisions about prices or production. On the contrary, external strategic trade policies influence the behaviour of foreign firms and force them to act in the way desired by the home government. Mixed strategies associate both actions and may lead to a collusive agreement. We show that if subsidy is an attractive policy tool for internal strategic trade policy with Cournot-Nash competition, Voluntary Export Restraints agreements are an equivalent and alternative strategic trade policy for governments having more preference for fiscal restraints than for the surplus of consumers and the general welfare. It is acceptable by foreign firms because they are less predatory than alternative measures. Retaliations by foreign countries are avoided by the agreement; VERs allow to impose a co-operative framework.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||1994|
|Publication status:||Published in Recherches économiques de Louvain, 1994, 60 (2)|
|Note:||View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01393890|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-01393890. 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: (CCSD)
If references are entirely missing, you can add them using this form.