ECON 2350 Lecture Notes - Lecture 7: Protectionism, Robert Crandall, Voluntary Export Restraints
22 Feb 2017
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Suppose, for example, that two firms agree, either explicitly or implicitly to sell a certain model of refrigerator for . One way is to offer to beat any price a customer can find. That way, the customers report any attempts to cheat on the collusive arrangement. During the 1980s, the japanese automobile companies agreed to a voluntary export restraint (ver). This meant that they would voluntarily reduce the exports of their automobiles to the. The typical u. s. consumer thought that this was a great victory for u. s. trade negotiators. -but if you think about this for a minute, things look quite different. In our examination of oligopoly we have seen that the problem facing firms in an industry is how to restrict output in order to support higher prices and discourage competition. As we"ve seen, there will always be a temptation to cheat on production agreements; every cartel must find a way to detect and prevent this cheating.
