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When Are Voluntary Export Restraints Voluntary? : A Differential Game Approach

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  • Kenji Fujiwara

    (Kwansei Gakuin University)

Abstract

We revisit voluntariness of voluntary export restraints (VERs) in a differential game model of duopoly with sticky prices. We show that a VER set at the free trade level has no effect on equilibrium under open-loop strategies while the same policy results in a smaller profit for the exporting firm, i.e. it is involuntary under a non-linear feedback strategy. Moreover, we prove an extended proposition of Dockner and Haug (1991) on voluntariness of VERs under a linear feedback strategy.

Suggested Citation

  • Kenji Fujiwara, 2010. "When Are Voluntary Export Restraints Voluntary? : A Differential Game Approach," Discussion Paper Series 52, School of Economics, Kwansei Gakuin University, revised Apr 2010.
    • Handle: RePEc:kgu:wpaper:52
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    Cited by:

    1. Steffen Jørgensen & Ngo Long & Gerhard Sorger, 2018. "Preface: Special issue of Dynamic Games and Applications in Memory of Professor Engelbert J. Dockner," Dynamic Games and Applications, Springer, vol. 8(3), pages 457-467, September.
    2. Luca Lambertini & Arsen Palestini, 2018. "Voluntary Export Restraints in a Trade Model with Sticky Price: Linear and Nonlinear Feedback Solutions," Dynamic Games and Applications, Springer, vol. 8(3), pages 507-518, September.
    3. Javier Frutos & Guiomar Martín-Herrán, 2018. "Selection of a Markov Perfect Nash Equilibrium in a Class of Differential Games," Dynamic Games and Applications, Springer, vol. 8(3), pages 620-636, September.

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