Why Voluntary Export Restraints Are Voluntary: An Extension

Chao-Cheng Mai and Hong Hwang

Canadian Journal of Economics, 1988, vol. 21, issue 4, 877-82

Abstract: This paper presents a conjectural variation approach to examine the conditions under which voluntary export restraints are voluntary. Th e authors have shown that the value of the conjectural variation is a critical factor for determining the effects of voluntary export restraints. In particular, if the free trade equilibrium is more collusive than Cournot, the imposition of voluntary export restraints at the free trade level of imports leads to a reduction in the profit of the foreign firm. Unde r such circumstances, voluntary export restraints are "involuntary," which is contrary to R. Harris's (1985) assertion.

Date: 1988
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