THE ECONOMICS OF VOLUNTARY EXPORT RESTRAINT AGREEMENTS

Abstract

Abstract. The three substantive sections of this survey deal with the economic consequences of voluntary export restraint agreements (VERs), e.g. the Multi‐Fibre Arrangement and VERs on Japanese auto exports. Section 2 focuses on the disposition of quota rents under the assumptions of perfectly competitive markets and the absence of substitute suppliers. Section 3 considers imperfect competition and the role of VERs as cartelization instruments, facilitating collusion. Section 4 analyzes the discriminatory effects of VERs when there are third country suppliers. A broad conclusion is that the economic consequences of VERs are more complex than the standard trade policy analysis based on tariffs because of the issues discussed in Sections 3 and 4.

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