In this article a model of vertical product differentiation with two firms (a home firm and a foreign firm) engaged in endogenous quality competition. The firms engage in a two-stage game, where in the first stage they choose qualities in a sequential manner. In the second stage, the firms compete in quantities (a la Cournot) moving sequentially again. In the second part of this article, the impact of quantitative restrictions (ike a VER or quota) on the quality choices and other related variables like prices, firm profitability, consumer surplus, etc.