Price and quality effects of VERs - revisited : a case study of Korean footwear exports

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Price and quality effects of VERs - revisited : a case study of Korean footwear exports, Volume 1

Author:	De Melo, Jaime; Winters, L. Alan;	Collection Title:	Policy, Planning and Research Department working papers ; no. WPS 216
Country:	Korea, Republic of;	Date Stored:	2001/04/27
Document Date:	1989/06/30	Document Type:	Policy Research Working Paper
Language:	English	Major Sector:	(Historic)Economic Policy
Region:	East Asia and Pacific	Report Number:	WPS216
Sub Sectors:	Trade	SubTopics:	Common Carriers Industry; Markets and Market Access; Economic Theory & Research; Transport and Trade Logistics; Access to Markets
Volume No:	1

Summary: The application of index numbers to disaggregated Korean footwear exports during 1974-85 suggests that binding voluntary export restraints (VERs) led to significant price increases but not to the upgrading of quality predicted in earlier theoretical analyses. The results in this paper were derived from exporters rather than importers data. Drawing its comparisons from multilateral indices, the paper finds that the price of Korean footwear exports to the United States rose significantly in the years when the VERs were binding. VERs were associated less with quality upgrading and if anything were possibly associated with quality downgrading. The empirical results confirm that as a result of VER type restrictions on shoes, rents accrue to the exporting country, but shoes do not show the improved quality that automobiles do under similar restrictions.


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