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Export restraints and horizontal product differentiation

Nicolas Boccard () and Xavier Wauthy

No 1997082, CORE Discussion Papers from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: We consider the effects of export restraints on price competition in the Hotelling model of hor- izontal product differentiation. We characterise the Nash equilibrium for all possible values of the quota and compare our results with those of Krishna [89]. We show that a foreign pro- ducer would choose a Voluntary Export Restraint in the vicinity of the Free Trade Equilibrium. In order to maximise domestic welfare, a government would not necessarily choose complete protectionism nor free trade.

Keywords: Hotelling; optimal quota; price competition (search for similar items in EconPapers)
JEL-codes: D43 F13 L13 (search for similar items in EconPapers)
Date: 1997-10-01
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