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Foreign monopoly and self-enforcing tariff agreements under integrated markets: Prices versus quantities

Author

Listed:
  • M. Dolores Alepuz

    (University of Valencia)

  • Santiago J. Rubio

    (University of Valencia)

Abstract

This paper studies the stability of a tariff agreement among the importers of a monopolized good that is sold in an integrated market. The tariff agreement formation is modelled as a two-stage game. In the first stage, each importer decides whether or not to sign the agreement, and in the second stage the signatories choose cooperatively their tariffs whereas the non-signatories and the monopoly act in a non-cooperative way. Our findings show that the agreement consists of three countries regardless of whether the monopolist chooses the quantity or the price and the number of importers, provided that the parties to the agreement act as a leader in the second stage of the game.

Suggested Citation

  • M. Dolores Alepuz & Santiago J. Rubio, 2009. "Foreign monopoly and self-enforcing tariff agreements under integrated markets: Prices versus quantities," Investigaciones Economicas, Fundación SEPI, vol. 33(1), pages 39-68, January.
  • Handle: RePEc:iec:inveco:v:33:y:2009:i:1:p:39-68
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    Citations

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    Cited by:

    1. Santiago Rubio, 2011. "On Capturing Rent from a Non-renewable Resource International Monopoly: Prices Versus Quantities," Dynamic Games and Applications, Springer, vol. 1(4), pages 558-580, December.

    More about this item

    Keywords

    Self-enforcing tariff agreements; integrated markets; rent-shifting hypothesis.;

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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