ABSTRACT
Recent analysis of voluntary export restraints (VERs) has focussed on two leading questions: (1) Under what circumstances does a VER enhance the wellbeing of the importing country? (2) Under what circumstances does a VER increase the pro®ts of exporters? In an enlightening paper, Suzumura and Ishikawa (1997) have shown that, in a context of differentiated international duopoly, the two questions are really the two sides of one coin. For it is their central conclusion that, whether the duopolists compete in prices or quantities, a VER set equal to the free-trade level of exports enhances the wellbeing of the importing country if and only if it reduces the pro®ts of the exporting ®rm, that is, if and only if it must be forced upon the exporting ®rm. As the authors remark, their ®nding suggests that VERs are `particularly insidious protectionist measures.'
