Price undertakings, VERs, and foreign direct investment: the case of foreign rivalry

Jota Ishikawa and Kaz Miyagiwa ()

Canadian Journal of Economics, 2008, vol. 41, issue 3, 954-970

Abstract: Antidumping (AD) petitions are often withdrawn in favour of voluntary export restraints (VERs) and price undertakings. This paper compares these policy options in the presence of protection-jumping foreign direct investment (FDI), with special emphasis on rivalry between foreign firms. We show that a VER is less likely to induce FDI than a price undertaking or AD. As a result, by settling AD cases with VER agreements, the importing country can pursue a more protectionist policy without triggering FDI. In this sense the GATT ban on VERs following the proliferation of AD uses was a sensible decision.

JEL-codes: F1 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (5)

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Journal Article: Price undertakings, VERs, and foreign direct investment: the case of foreign rivalry (2008)
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