Voluntary Export Restraints and Expectations: An Analysis of Export Quotas in Oligopolistic Markets.

The frequency of export quotas imposed as voluntary export restraints has been increasing. This tends to create the expectation that similar export quotas will be imposed in the future, even if free trade is allowed now. The author analyzes the effect of such an expectation. He demonstrates that if a quota is expected to be imposed on foreign exporting firms, it intensifies the exporting firms' competition in the prequota period. This offsets the protection which the export quota, as a voluntary export restraint, will provide for domestic import-competing firms in the future quota period. Copyright 1989 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.