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Voluntary import expansions with non‐stationary demand

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  • Xiaopeng Yin

Abstract

. In this paper the effect of voluntary imports expansions (VIEs) on welfare in a dynamic game is analysed. It is found that (1) there exists a Markov perfect Nash equilibrium (MPNE) and a unique stable steady state; (2) with habit formation in consumption, the welfare and output for each firm are higher than that without habit formation; and (3) VIEs can increase an importing country's welfare with raised consumption and lowered price. Therefore, VIEs can be voluntary to an importing country. JEL classification: F13, F12 Expansions volontaires des importations quand la demande est non stationnaire. Ce mémoire analyse les effets des expansions volontaires des importations (EVI) sur le niveau de bien‐être dans un jeu dynamique. On découvre que (i) il existe un équilibre de Nash parfait à la Markov (ENPM) et un régime permanent unique et stable; (ii) avec formation des habitudes dans la consommation, le bien‐être et la production pour chaque entreprise sont plus forts que sans formation des habitudes; et (iii) les EVI peuvent accroître le niveau de bien‐être d’un pays importateur avec un niveau de consommation accru et des prix plus bas. En conséquence, les EVI peuvent être volontaires dans un pays importateur.

Suggested Citation

  • Xiaopeng Yin, 2004. "Voluntary import expansions with non‐stationary demand," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 37(4), pages 1084-1096, November.
    • Handle: RePEc:wly:canjec:v:37:y:2004:i:4:p:1084-1096
    DOI: 10.1111/j.0008-4085.2004.00261.x
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    References listed on IDEAS

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    1. Greaney, Theresa M., 1996. "Import now! An analysis of market-share voluntary import expansions (VIEs)," Journal of International Economics, Elsevier, vol. 40(1-2), pages 149-163, February.
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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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