DP283 | Voluntary Export Restraints: UK Restrictions on Imports of Leather Footwear from Eastern Europe

Publication Date

01/11/1988

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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.