Price, Quality and Welfare Effects of European VERs on Japanese Autos
Résumé
This paper examines the impact of the VERs negotiated by the U.K., France and Germany with Japanese car makers. Market share analysis shows that the VERs did not arrest the declines in apparent consumption by local producers. Further analysis from a sample of Japanese (and other) cars sold on the French and German markets indicates quality upgrading between 1981 and 1983. The data also suggest that the VER was strictly binding in France starting around 1984 but not in Germany until 1985, the end of the sample period. Finally, the paper shows that the French, German and Japanese car producers supplied an increasingly similar product mix on the French market throughout the sample period (1979–1985) but the Italian producers shifted towards a lower (fiscal) horsepower mix.