This paper shows that moving from market segmentation to market integration (i.e. firms can no longer discriminate among markets) may have anti-competitive effects in a repeated game setting in which a simple trigger strategy is the enforcement strategy. In particular, we show that two countries can never both experience pro-competitive gains and that two similar countries always both experience anti-competitive effects from market integration. We show that the same conclusions hold when trade liberalization is understood as being a decrease in bilateral barriers to trade followed by the switch from market segmentation to market integration.
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number
CESifo Working Paper No. 166.
Find related papers by JEL classification: F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies F15 - International Economics - - Trade - - - Economic Integration L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
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