Abstract
This paper characterizes market equilibrium under oligopoly, when a VER has introduced both asymmetry amongst exporters, and uncertainty. A restrained and an unrestrained exporter choose price strategically, under the ‘threat’ of a VER on the latter. A pure strategy equilibrium is shown to result only when the probability of the VER is high. Otherwise a unique mixed strategy equilibrium results. As the probability of the VER rises, the expected domestic price rises, even if the VER is not imposed.