A voluntary export restraint ( VER) is preferred to a tariff by a government concerned about electoral returns when the influence of industry profits is large relative to the losses to consumers from higher prices. If the foreign firm is uncertain of these pressures, the antidumping (AD) code facilitates the complete transfer of the relevant information and generates a VER rather than a tariff in equilibrium. The choice across instruments is determined by the political attributes. Domestic and foreign profits rise with the AD-generated VER, and the VER lowers the volume of trade by more than the expected duty.
|Original language||English (US)|
|Number of pages||18|
|Journal||American Economic Review|
|State||Published - Jun 1 1996|
ASJC Scopus subject areas
- Economics and Econometrics