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Export Restraints and Horizontal Product Differentiation

Nicolas Boccard () and Xavier Wauthy

No 1997024, Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: We consider the effects of export restraints on price competition in the Hotelling model of horizontal differentiation. We characterize the Nash equilibrium for all possible values of the quota and compare our results with those of Krishna (89). We show that a foreign producer would choose a VER in the vicinity of the Free Trade Equilibrium. In order to maximize domestic welfare, a government would 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)
Pages: 19
Date: 1997-01-01, Revised 1997-09
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Working Paper: Export restraints and horizontal product differentiation (1997) Downloads
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