ABSTRACT
This chapter focuses on to quantify the Voluntary Export Restraint's (VER) impact on market behavior and performance, estimation of the model's parameters reveals structural characteristics about the domestic automobile market which previously have not been established through estimation of a simultaneous system. The findings of VER study are thus organized into three categories. First, the estimated coefficients on quantities in the consumer demand equations and those on prices in the dealer demand equations are transformed into price flexibility and into demand elasticities, respectively. Second, estimation of the conjectural variation parameters in the manufacturer behavioral equations reveals the Japanese and US manufacturers' perceptions of market rivalry in the domestic market and the degree to which such perceptions were affected by the VER. Third, simulated values of transaction prices, wholesale prices and quantities demanded are compared to their actual values to indicate the VER's effects on the market equilibrium in the three disparate market segments.
