Voluntary Export Restraints on Automobiles: Evaluating a Strategic TradePolicy

   (726 K)

In May, 1981, a voluntary export restraint (VER) was placed on exports of automobiles from Japan to the United States. As trade policies go, this one was important. At about the same time, though to much less fanfare, international trade theorists were obtaining (then) startling results from models of international trade in imperfectly competitive markets. These models suggested that in imperfectly competitive markets, an activist trade policy might enhance national welfare. In this paper, we provide some empirical evidence on whether these new theoretical possibilities might actually apply to the policy of VERs.

Published: American Economic Review, Vol.89, no. 3 (1999): 400-430.

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