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Price and quality effects of VERs - revisited : a case study of Korean footwear exports

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  • De Melo, Jaime
  • Winters, L. Alan

Abstract

The application of index numbers to disaggregated Korean footwear exports during 1974-85 suggests that binding voluntary export restraints (VERs) led to significant price increases but not to the upgrading of quality predicted in earlier theoretical analyses. The results in this paper were derived from exporters rather than importers data. Drawing its comparisons from multilateral indices, the paper finds that the price of Korean footwear exports to the United States rose significantly in the years when the VERs were binding. VERs were associated less with quality upgrading and if anything were possibly associated with quality downgrading. The empirical results confirm that as a result of VER type restrictions on shoes, rents accrue to the exporting country, but shoes do not show the improved quality that automobiles do under similar restrictions.

Suggested Citation

  • De Melo, Jaime & Winters, L. Alan, 1989. "Price and quality effects of VERs - revisited : a case study of Korean footwear exports," Policy Research Working Paper Series 216, The World Bank.
    • Handle: RePEc:wbk:wbrwps:216
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    References listed on IDEAS

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    1. Bark, Taeho & de Melo, Jaime, 1988. "Export Quota Allocations, Export Earnings, and Market Diversification," The World Bank Economic Review, World Bank, vol. 2(3), pages 341-348, September.
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    Cited by:

    1. Larue, Bruno & Gervais, Jean-Philippe, 1996. "The Impact of the Canada-U.S. Hog/Pork Trade Dispute on the Composition of U.S. Pork Imports," Agricultural and Resource Economics Review, Cambridge University Press, vol. 25(2), pages 187-199, October.

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