ABSTRACT
Researchers have been using theoretical and empirical models to assess the impact of the Voluntary Export Restraint (VER) on national welfare. However, each of those models has limitations which impede its ability accurately to measure the VER's effects. This chapter discusses the dual purpose of evaluating the change in market rivalry between Japanese and US producers with the imposition of the VER and of assessing the VER's impact on profits of Japanese and US automobile manufacturers and their domestic dealers. The change in the conjectural variation parameters from the pre- VER to the VER period is consistent with a move toward US price leadership. But, more conclusive evidence of a change in pricing strategies would require simulation over a longer VER period. The chapter describes the extensions of the research. The behavioral assumptions for the pre-VER period do have some bearing on the simulated values of prices and quantities.
