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Fundamental difficulty underlying international harmonization of competition policies


  • Makoto Yano
  • Takakazu Honryo


The international harmonization of competition policies is widely perceived as a prime area for international policy discussion. We demonstrate that this harmonization, unlike a general tariff reduction, cannot be guided by the principle of reciprocity. Towards this end, we build a two-country partial equilibrium model with non-tradable service sectors. The governments play a game in which they choose the degrees of competition in their respective service sectors. In a Nash equilibrium, one country chooses the perfectly competitive policy whereas the other country chooses an imperfectly competitive policy. This equilibrium cannot be transformed into the first best state by the principle of reciprocity.
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Suggested Citation

  • Makoto Yano & Takakazu Honryo, 2011. "Fundamental difficulty underlying international harmonization of competition policies," International Journal of Economic Theory, The International Society for Economic Theory, vol. 7(1), pages 111-118, March.
  • Handle: RePEc:bla:ijethy:v:7:y:2011:i:1:p:111-118
    DOI: j.1742-7363.2010.00154.x

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    References listed on IDEAS

    1. Amiti, Mary & Pissarides, Christopher A., 2005. "Trade and industrial location with heterogeneous labor," Journal of International Economics, Elsevier, vol. 67(2), pages 392-412, December.
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    Cited by:

    1. Martos Luis Palma & Hidalgo José Luis García, 2013. "Institutional Aspects of International Competition Policy," Scientific Annals of Economics and Business, De Gruyter Open, vol. 60(2), pages 1-21, December.

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