Trade Liberalization and Cartel Stability

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Trade Liberalization and Cartel Stability

Author Info

Lommerund, K.E.
Sorgard, L.

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Abstract

Will reduced trade barriers increase or reduce the chance that the producers in an international duopoly reach a collusive agreement about not exporting into each others domestic markets? Reduced trade costs increase the short-run gains from deviating from a collusive agreement, but can also make the long-run punishment of such a strategy harsher. In a model where collusion on prices are supported by a trigger strategy, we find a reduction in trade costs weakens competition in the sense that collusion is easier to sustain.

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Publisher Info
Paper provided by Department of Economics, University of Bergen in its series Norway; Department of Economics, University of Bergen with number 0198.

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Length: 24 pages
Date of creation: 1998
Date of revision:
Handle: RePEc:fth:bereco:0198

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Article
- Lommerud, Kjell Erik & Sorgard, Lars, 2001. "Trade Liberalization and Cartel Stability," Review of International Economics, Blackwell Publishing, vol. 9(2), pages 343-55, May. [Downloadable!] (restricted)

Find related papers by JEL classification:
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
L4 - Industrial Organization - - Antitrust Issues and Policies

Cited by:
(explanations, 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.)

Switgard Feuerstein, 2004. "Collusion with Fluctuating Exchange Rates: A Note," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 11(1), pages 107-116, February. [Downloadable!] (restricted)
Ronald B. Davies & Benjamin Liebman, 2003. "Self-Protection: Antidumping Duties, Collusion and FDI," University of Oregon Economics Department Working Papers 2003-36, University of Oregon Economics Department, revised 01 Nov 2003. [Downloadable!]
Other versions:
- Ronald B. Davies & Benjamin H. Liebman, 2006. "Self-protection? Antidumping Duties, Collusion, and FDI," Review of International Economics, Blackwell Publishing, vol. 14(5), pages 741-757, November. [Downloadable!] (restricted)
Philipp J. H. Schröder, 2004. "Cartel Stability and Economic Integration," Discussion Papers of DIW Berlin 432, DIW Berlin, German Institute for Economic Research. [Downloadable!]
Other versions:
- Philipp J. H. Schröder, 2007. "Cartel Stability and Economic Integration," Review of International Economics, Blackwell Publishing, vol. 15(2), pages 313-320, 05. [Downloadable!] (restricted)
Haufler, Andreas & Schjelderup, Guttorm, 2000. "Tacit Collusion under Destination- and Origin-Based Commodity Taxation," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
Other versions:
- Haufler, A. & Schjelderup, G., 1999. "Tacit Collusion under Destination- and Origin-Based Commodity Taxation," Papers 8/99, Norwegian School of Economics and Business Administration-.
- Andreas Haufler & Guttorm Schielderup, 1999. "Tacit Collusion under Destination - and Origin-Based Commodity Taxation," CoFE Discussion Paper 99-17, Center of Finance and Econometrics, University of Konstanz. [Downloadable!]
Dirk Schindler & Guttorm Schjelderup, 2006. "Company Tax Reform in Europe and its Effect on Collusive Behavior," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
Other versions:
- Dirk Schindler & Guttorm Schjelderup, 2006. "Company Tax Reform in Europe and its Effect on Collusive Behavior," CoFE Discussion Paper 06-01, Center of Finance and Econometrics, University of Konstanz. [Downloadable!]
Constantinos Syropoulos & Eric Bond, 2003. "Is the Tariff the ‘Mother of Trusts’? Reciprocal Trade Liberalization with Multimarket Collusion," Working Papers 0310, Florida International University, Department of Economics. [Downloadable!]
Lommerud, Kjell Erik & Sørgard, Lars, 2002. "Entry in Telecommunication: Customer Loyalty, Price Sensitivity and Access Prices," CEPR Discussion Papers 3502, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
Other versions:
- Lommerud, Kjell Erik & Sorgard, Lars, 2003. "Entry in telecommunication: customer loyalty, price sensitivity and access prices," Information Economics and Policy, Elsevier, vol. 15(1), pages 55-72, March. [Downloadable!] (restricted)

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