WHEN ARE VOLUNTARY EXPORT RESTRAINTS VOLUNTARY? A DIFFERENTIAL GAME APPROACH
We revisit voluntariness of voluntary export restraints (VERs) in a differential game model of duopoly with sticky prices. We show that a VER set at the free trade level has no effect on equilibrium under open-loop strategies while the same policy results in a smaller profit for the exporting firm, i.e. it is involuntary under a non-linear feedback strategy. Moreover, we prove an extended proposition of Dockner and Haug (1991) on voluntariness of VERs under a linear feedback strategy. Copyright 2010 The Author. Journal compilation 2010 Blackwell Publishing Ltd/University of Adelaide and Flinders University.
Year of publication: |
2010
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Authors: | FUJIWARA, KENJI |
Published in: |
Australian Economic Papers. - Wiley Blackwell. - Vol. 49.2010, 2, p. 101-110
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Publisher: |
Wiley Blackwell |
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