Import Quotas, Export Promotion and Intra-Industry Trade

Aditya Bhattacharjea

No 96, Working papers from Centre for Development Economics, Delhi School of Economics

Abstract: Most existing models of protection-induced exports, as well as models of intra-industry trade (IIT), are based on imperfect competition in both the home and foreign countries, usually with increasing returns to scale. This paper shows how import quotas can induce exports and IIT in identical or vertically differentiated products, in a model where an oligopolistic domestic industry with increasing costs faces a competitive world market. It also derives welfare results that go beyond the earlier literature, and shows that relaxation of a voluntary export restraint (VER) can reduce welfare relative to autarky over a wide range, with or without IIT.

Keywords: Quotas; voluntary export restraints; export promotion; intra-industry trade; oligopoly. (search for similar items in EconPapers)
JEL-codes: F13 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2001-08
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Working Paper: Import Quotas, Export Promotion and Intra-industry Trade (2008)
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