ABSTRACT
This chapter explores the empirical study of the ways in which import protection, in the form of the Voluntary Restraint Agreements (VRAs), affected output and prices in the US auto market. The empirical analysis presented here will show that the VRAs had significant effects on domestic prices and sales, in certain classes of cars considered. It also appears that each of the US based producers responded differently to the quotas, which implies that firm strategy and market power/position considerations were important factors in determining the way in which the VRAs affected the domestic industry. The models used take into account the structure of the domestic industry and assess its impact on outcomes, or performance, in this market. The chapter shows that the VRAs were only one of several significant government policies which brought about changes in the behavior of domestic auto producers. The most important of these were apparently the Corporate Auto Fuel Economy standards and the "Gas Guzzler" tax.
