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Voluntary Export Restraints on Automobiles: Evaluating a Strategic TradePolicy

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  • Steven Berry
  • James Levinsohn
  • Ariel Pakes

Abstract

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.

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  • Steven Berry & James Levinsohn & Ariel Pakes, 1995. "Voluntary Export Restraints on Automobiles: Evaluating a Strategic TradePolicy," NBER Working Papers 5235, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:5235
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    Cited by:

    1. Francois, Joseph & Manchin, Miriam & Martin, Will, 2013. "Market Structure in Multisector General Equilibrium Models of Open Economies," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 1571-1600, Elsevier.
    2. Weifang Lou & David Prentice & Xiangkang Yin, 2008. "The Effects of Product Ageing on Demand: The Case of Digital Cameras," Working Papers 2008.06, School of Economics, La Trobe University.
    3. Robert W. Staiger & Kyle Bagwell, 1999. "An Economic Theory of GATT," American Economic Review, American Economic Association, vol. 89(1), pages 215-248, March.
    4. James Levinsohn, 1997. "Carwars: Trying to Make Sense of U.S.-Japan Trade Frictions in the Automobile and Automobile Parts Markets," NBER Chapters, in: The Effects of US Trade Protection and Promotion Policies, pages 11-32, National Bureau of Economic Research, Inc.
    5. Barber, Brad M. & Click, Reid W. & Darrough, Masako N., 1999. "The impact of shocks to exchange rates and oil prices on U.S. sales of American and Japanese automakers," Japan and the World Economy, Elsevier, vol. 11(1), pages 57-93, January.
    6. A. de Palma & K. Kilani, 2003. "Compensating Variation for Discrete Choice Models," THEMA Working Papers 2003-02, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    7. davis, peter, 2006. "The Discrete Choice Analytically Flexible (DCAF) Model of Demand for Differentiated Products," CEPR Discussion Papers 5880, C.E.P.R. Discussion Papers.
    8. Manez, Juan A. & Waterson, Michael, 2001. "Multiproduct Firms and Product Differentiation: A Survey," Economic Research Papers 269364, University of Warwick - Department of Economics.
    9. Bagwell, Kyle & Staiger, Robert W., 2001. "Reciprocity, non-discrimination and preferential agreements in the multilateral trading system," European Journal of Political Economy, Elsevier, vol. 17(2), pages 281-325, June.
    10. Feenstra, Robert C., 1995. "Estimating the effects of trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 30, pages 1553-1595, Elsevier.
    11. Liliana Winkelmann & Rainer Winkelmann, 1997. "The costs of non-tariff barriers to trade: Evidence from New Zealand," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 133(2), pages 270-281, June.
    12. James Levinsohn & Steven Berry & Ariel Pakes, 1999. "Voluntary Export Restraints on Automobiles: Evaluating a Trade Policy," American Economic Review, American Economic Association, vol. 89(3), pages 400-430, June.
    13. Michael M. Knetter, 1994. "Why are Retail Prices in Japan so High?: Evidence from German Export Prices," NBER Working Papers 4894, National Bureau of Economic Research, Inc.
    14. Pontus Braunerhjelm & Per Thulin, 2009. "Agglomeration, Relative Wage Costs and Foreign Direct Investment—Evidence from Swedish MNCs 1974–1998," Journal of Industry, Competition and Trade, Springer, vol. 9(3), pages 197-217, September.
    15. Ann Harrison & Ana Revenga, 1995. "The Effects of Trade Policy Reform: What Do We Really Know?," NBER Working Papers 5225, National Bureau of Economic Research, Inc.

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    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment

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