Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/159261
Authors: 
Lambertini, Luca
Calzolari, Giacomo
Year of Publication: 
2001
Series/Report no.: 
Quaderni - Working Paper DSE 420
Abstract: 
This paper examines the impact of voluntary export restraints (VERs) in an international duopoly modelled as a differential game. We employ two well known capital accumulation dynamics for firms, due to Herlove and Arrow and to Ramsey, respectively. First we investigate Cournot behavour, showing that, in both models, a VERs cannot ne "voluntarily" employedby the foreign firms. Our analysis therefore suggests that the empirical observation of VERs corresponds to their use either as coordinating or as quasi-collusive devices in markets where firms are price setters and sales are not capacity-constrained. This is confirmed by our analysis of price competition. The Bertrand steady state of the Solow-Nerlove-Arrow model coincides with the Cournot equilibrium, and therefore the foreign firm cannot be expected to voluntarily adopt an export restraint. However, the opposite holds in the case of price behavior in the ramsey setting, where the adoption of anexport restraint may increase the profits of both firms.
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/3.0/
Document Type: 
Working Paper

Files in This Item:
File
Size
312.47 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.