The story line a recent trade frictions between the U.S. and Japan in the auto market goes as follow. Initially, there was not much trade Japanese cars were made in Japan with mostly Japanese parts and the same was mostly true of North American cars.

In May, 1981, a voluntary export restraint (VER) was placed on exports of automobiles from Japan to the United States. As trade policies go, this one was important. The automobile industry is the largest manufacturing industry in the United States and the initiation of the VER captured head-...

This paper has reviewd productivity in the auto industry from three quite different approaches and then suggested and implemented a fouth approach. The appproach used is the only econometruc approach to measuring firm productivity that permits reporting firm-level productivity results, and it...