Market-Share Import Restraints in Oligopoly.

This paper contributes to the theoretical analysis of proportional import restraints; that is, restraints that are defined in terms of percentage market share rather than in terms of volume of imports. It is shown that an increase in the market share of foreign firms from zero has a negative effect locally on domestic welfare. In the case of a domestic oligopoly, domestic firms may prefer a proportional restraint over an equivalent volume restraint. Copyright 1999 by Blackwell Publishing Ltd.