Theoretical models predict that quantitative import restrictions, such as orderly marketing agreements (OMAs), lead to substitution into higher quality products within the quotaconstrained import category. The country specific nature of OMAs results in further substitution among supplying countries. Using index number techniques, this paper measures the impact of product and country substitution on the price of U.S. footwear imports in the period surrounding the 1977-1981 footwear OMA with Korea and Taiwan. Upgrading of the import bundle was observed in most quota categories throughout the OMA period and accounted for 12 percent of the observed rise in the average price of footwear imports.
All Science Journal Classification (ASJC) codes
- Economics and Econometrics