Quality Change Under Trade Restraints in Japanese Autos

Abstract

In this paper we investigate the quality change in Japanese car and truck imports over 1979-1985. Car imports have been subject to a quota restraint since April 1981, while compact trucks have faced an ad valorem tariff of 25 percent since August 1980. We find evidence of substantial upgrading in Japanese car imports, with ambiguous quality change in trucks. The welfare cost of the quota restraint in cars exceeds $1,000 per import in 1983 and 1984. I.