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Cartel Stability and Economic Integration

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  • Philipp J. H. Schröder

Abstract

This paper revisits the notion that economic integration-modeled as a reduction of trade costs-may be anticompetitive, in the sense that it may reinforce the ability of an international cartel to maintain a collusive understanding about staying out of each other's markets. The paper is novel in terms of introducing ad valorem and fixed trade costs in addition to the customary unit trade costs. It is shown that an anticompetitive effect, found for reductions in unit trade costs, may disappear once trade costs are ad valorem or fixed. Copyright � 2007 The Author; Journal compilation � 2007 Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 15 (2007)
Issue (Month): 2 (05)
Pages: 313-320

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Handle: RePEc:bla:reviec:v:15:y:2007:i:2:p:313-320

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References

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  1. Andrew K. Rose, 2000. "One money, one market: the effect of common currencies on trade," Economic Policy, CEPR & CES & MSH, vol. 15(30), pages 7-46, 04.
  2. Davidson, Carl, 1984. "Cartel stability and tariff policy," Journal of International Economics, Elsevier, vol. 17(3-4), pages 219-237, November.
  3. David Cox & Richard Harris, 1983. "Trade Liberalization and Industrial Organization: Some Estimates for Canada," Working Papers 523, Queen's University, Department of Economics.
  4. Lommerund, K.E. & Sorgard, L., 1998. "Trade Liberalization and Cartel Stability," Norway; Department of Economics, University of Bergen 0198, Department of Economics, University of Bergen.
  5. Xenia Matschke, 1999. "On the Impact of Import Quotas on a Quantity-Fixing Cartel in a Two-Country-Setting," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 219(3+4), pages 438-457, September.
  6. Smith, Alasdair & Venables, Anthony J., 1988. "Completing the internal market in the European Community : Some industry simulations," European Economic Review, Elsevier, vol. 32(7), pages 1501-1525, September.
  7. Fung, K C, 1992. "Economic Integration as Competitive Discipline," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(4), pages 837-47, November.
  8. Julio J. Rotemberg & Garth Saloner, 1989. "Tariffs vs Quotas with Implicit Collusion," Canadian Journal of Economics, Canadian Economics Association, vol. 22(2), pages 237-44, May.
  9. Chris Allen & Michael Gasiorek & Alasdair Smith, 1998. "The competition effects of the Single Market in Europe," Economic Policy, CEPR & CES & MSH, vol. 13(27), pages 439-486, October.
  10. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-23, June.
  11. Baier, Scott L. & Bergstrand, Jeffrey H., 2001. "The growth of world trade: tariffs, transport costs, and income similarity," Journal of International Economics, Elsevier, vol. 53(1), pages 1-27, February.
  12. Schröder, Philipp J.H. & Jørgensen, Jan G., 2001. "Reductions in Real versus Tariff Barriers: The Effects on Industry Concentration," MPRA Paper 124, University Library of Munich, Germany.
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Cited by:
  1. Aditya Bhattacharjea & Uday Bhanu Sinha, 2012. "Multi-market Collusion with Territorial Allocation," Working papers 217, Centre for Development Economics, Delhi School of Economics.
  2. Jürgen Bitzer & Holger Görg & Philipp J.H. Schröder, 2012. "Can Trade Really Hurt? An Empirical Follow-Up On Samuelson'S Controversial Paper," Economic Inquiry, Western Economic Association International, vol. 50(3), pages 724-738, 07.

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