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Economic Integration as Competitive Discipline

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  • Fung, K C

Abstract

This paper reexamines the standard notion that economic integration will promote competition. Using an illustrative model, it is shown that integration will indeed enhance competition if the foreign firm is the low-cost producer. But if the foreign firm is the high-cost producer, integration will retard competition if the initial tariff level is low. The results of this paper suggest that trade liberalization does not always provide competitive discipline. Competition policy must still be actively enforced even when economies are becoming increasingly open. Copyright 1992 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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Bibliographic Info

Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 33 (1992)
Issue (Month): 4 (November)
Pages: 837-47

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Handle: RePEc:ier:iecrev:v:33:y:1992:i:4:p:837-47

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Cited by:
  1. L. Colombo & P. Labrecciosa & L. Lambertini, 2005. "A Chicken Game of Intraindustry Trade," Working Papers 548, Dipartimento Scienze Economiche, Universita' di Bologna.
  2. J Peter Neary & Joe Tharakan, 2005. "Endogenous Mode of Competition in General Equilibrium," Working Papers 200526, School Of Economics, University College Dublin.
  3. Ioana Veronica ALEXA & Simona Valeria TOMA & Daniela Ancuţa SARPE, 2013. "Strategic Investment and Trade in an Oligopolistic Setting," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 2, pages 5-10.
  4. Akinbosoye, Osayi & Bond, Eric W. & Syropoulos, Constantinos, 2012. "On the stability of multimarket collusion in price-setting supergames," International Journal of Industrial Organization, Elsevier, vol. 30(2), pages 253-264.
  5. NEARY, J. Peter & THARAKAN, Joe, 2011. "International trade with endogenous mode of competition in general equilibrium," CORE Discussion Papers 2011038, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Switgard Feuerstein, 2005. "Collusion in Industrial Economics—A Survey," Journal of Industry, Competition and Trade, Springer, vol. 5(3), pages 163-198, December.
  7. Philipp J. H. Schröder, 2004. "Cartel Stability and Economic Integration," Discussion Papers of DIW Berlin 432, DIW Berlin, German Institute for Economic Research.

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