Question: Under pressure from the Canadian and U.S. governments in the early 1980s, Japanese automobile producers agreed to restrict their exports to the North American market.

Under pressure from the Canadian and U.S. governments in the early 1980s, Japanese automobile producers agreed to restrict their exports to the North American market. After the formal agreement ended, the Japanese producers decided unilaterally to continue restricting their exports. Carefully review Figure 34-2 on page 857 and then answer the following questions.
a. Explain why the Japanese producers would voluntarily continue these restrictions.
b. Explain why an agreement to export only 100 000 cars to North America is better for the Japanese producers than a North American tariff that results in the same volume of Japanese exports.
c. Who is paying for these benefits to the Japanese producers?

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