Working Paper: CEPR ID: DP283
Authors: L. Alan Winters; P. A. Brenton
Abstract: A prominent feature of international trading relations since 1970 has been the spread of quantitative restrictions on imports. This paper describes initial work to quantify and assess the economic effects of such nontariff barriers (NTBs), taking as a case study the United Kingdom footwear industry. By way of example it considers the demand side effects of the voluntary export restraint on UK leather footwear imports from Comecon countries. Previous studies of NTBs have assumed that prices rise so as to clear the market following the imposition of quantitative restrictions. This paper departs from this practice by allowing for nonprice rationing in response to NTBs. We apply the Rotterdam model to describe the geographical allocation of imports since it provides a theoretically consistent but general system of demand equations and admits the simultaneous estimation of regimes in which quantity is determined endogenously and in which it is constrained.
Keywords: voluntary export restraints; footwear; eastern europe; rationed markets; nontariff barriers to trade
JEL Codes: 421; 422; 124; 631
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| voluntary export restraint (VER) (F14) | non-price rationing (D45) |
| voluntary export restraint (VER) (F14) | prices did not rise significantly (P22) |
| non-price rationing (D45) | market cleared (D41) |
| absence of the VER (C26) | Comecon capturing a significant share of the UK market (P23) |
| voluntary export restraint (VER) (F14) | estimated losses to UK consumers (D18) |