This paper presents a conjectural variation approach to examine the conditions under which VERS are voluntary. We have shown that the value of the conjectural variation is a critical factor for determining the effects of VERS. In particular, if the free trade equilibrium is more collusive than Cournot, the imposition of VERS at the free trade level of imports leads to a reduction in the profit of the foreign firm. Under such circumstances, VERS are `involuntary,' which is contrary to Harris's (1985) assertion.
The Canadian Journal of Economics 21(4), pp.877-882