Trading Market Access for Competition Policy Enforcement
AbstractMotivated by discussions in the World Trade Organization (WTO) on multilateral disciplines with respect to competition law, we develop a two-country model that explores the incentives of a less-developed country (LDC) to offer increased market access (via a tariff reduction) in exchange for a ban on foreign export cartels by its developed country (DC) trading partner. We show that such a bargain is feasible and can generate a globally welfare maximizing outcome. We also explore the incentives for bilateral cooperation when the LDC uses transfers to ‘pay’ for competition enforcement by the DC. A comparison of the two cases shows that there exist circumstances in which the stick (i.e. the tariff) is more effective in sustaining bilateral cooperation than the carrot (i.e. the transfer). Furthermore, the scope for cooperation is maximized when both instruments are utilized. An implication of the analysis is that LDCs have incentives not to bind tariffs in the absence of an explicit WTO prohibition of export cartels.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4110.
Date of creation: Nov 2003
Date of revision:
Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
Other versions of this item:
- Hoekman, Bernard & Saggi, Kamal, 2004. "Trading market access for competition policy enforcement," Policy Research Working Paper Series 3188, The World Bank.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kyle Bagwell & Robert W. Staiger, 2001.
"Domestic Policies, National Sovereignty, And International Economic Institutions,"
The Quarterly Journal of Economics,
MIT Press, vol. 116(2), pages 519-562, May.
- Kyle Bagwell & Robert W. Staiger, 1999. "Domestic Policies, National Sovereignty and International Economic Institutions," NBER Working Papers 7293, National Bureau of Economic Research, Inc.
- Horn, Henrik & Levinsohn, James A, 2000.
"Merger Policies And Trade Liberalization,"
CEPR Discussion Papers
2459, C.E.P.R. Discussion Papers.
- Horn, H. & Levinsohn, J., 1998. "Merger Policies and Trade Liberalization," Working Papers 420, Research Seminar in International Economics, University of Michigan.
- Henrik Horn & James Levinsohn, 1997. "Merger Policies and Trade Liberalization," NBER Working Papers 6077, National Bureau of Economic Research, Inc.
- Francois, Joseph F & Wooton, Ian, 2001.
"Trade in International Transport Services: The Role of Competition,"
Review of International Economics,
Wiley Blackwell, vol. 9(2), pages 249-61, May.
- Francois, Joseph & Wooton, Ian, 2000. "Trade in International Transport Services: The Role of Competition," CEPR Discussion Papers 2377, C.E.P.R. Discussion Papers.
- Joseph Francois & Ian Wooton, 2000. "Trade in International Transport Services: The Role of Competition," Tinbergen Institute Discussion Papers 00-057/2, Tinbergen Institute.
- Kyle Bagwell & Robert W. Staiger, 2004. "The Economics of the World Trading System," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262524341, January.
- Auquier, A A & Caves, R E, 1979. "Monopolistic Export Industries, Trade Taxes, and Optimal Competition Policy," Economic Journal, Royal Economic Society, vol. 89(355), pages 559-81, September.
- Richardson, Martin, 1999. "Trade and Competition Policies: Concordia Discors?," Oxford Economic Papers, Oxford University Press, vol. 51(4), pages 649-64, October.
- Brander, James A. & Spencer, Barbara J., 1984.
"Trade warfare: Tariffs and cartels,"
Journal of International Economics,
Elsevier, vol. 16(3-4), pages 227-242, May.
- Fink, Carsten & Mattoo, Aaditya & Neagu, Ileana Cristina, 2001.
"Trade in international maritime services : how much does policy matter?,"
Policy Research Working Paper Series
2522, The World Bank.
- Carsten Fink & Aaditya Mattoo & Ileana Cristina Neagu, 2002. "Trade in International Maritime Services: How Much Does Policy Matter?," World Bank Economic Review, World Bank Group, vol. 16(1), pages 81-108, June.
- Dixit, Avinash, 1984. "International Trade Policy for Oligopolistic Industries," Economic Journal, Royal Economic Society, vol. 94(376a), pages 1-16, Supplemen.
- Hoekman, Bernard & Saggi, Kamal, 2007. "Tariff bindings and bilateral cooperation on export cartels," Journal of Development Economics, Elsevier, vol. 83(1), pages 141-156, May.
- McCorriston, Steve & MacLaren, Donald, 2005. "Single-desk state trading exporters," European Journal of Political Economy, Elsevier, vol. 21(2), pages 503-524, June.
- Simon J. Evenett & Bernard M. Hoekman, 2006. "Economic Development and Multilateral Trade Cooperation," World Bank Publications, The World Bank, number 7412, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.