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Car production is the largest manufacturing sector in the EC, and it
will be strongly affected by European integration. In Discussion Paper
No. 360, Programme Director Alasdair Smith simulates EC trade
policies in a model in which the car industry is imperfectly competitive
and quotas on Japanese imports have an anti-competitive effect. The
removal of Spanish and Portuguese tariffs on EC imports bring a very
substantial gain to Iberian consumers. 1992 leads to an expansion of
intra-Community trade, reduced prices and large gains to consumers. In
both simulations, some producers gain and some lose. In external trade
policy, the removal of national restrictions on Japanese imports imposes
substantial costs on Fiat, Peugeot and Renault, because they inevitably
lose their dominant shares of the French, Italian and Spanish markets. A
Community-wide restriction imposes large costs on consumers and does
little to ease the problems of adjustment facing French and Italian
producers. |
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