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Competition Policy and International Trade

  • Levinsohn, J.

This paper presents a non-technical discussion of economic issues that arise due to links between competition (or anti-trust) policy and international trade. While recent advances in international trade theory have borrowed heavily from the industrial organization literature, this work has a schizophrenic quality to it. One of the insights that motivated the new trade theory was the observation that many markets were not perfectly competitive. For the case of purely domestic markets, the industrial organization literature provided a foundation for policy advice and most countries have well established public policy regarding competition between firms. While trade theorists have borrowed heavily from the theory of industrial organization, they seem to have ignored the existence of competition policy when investigating trade policy. The two interact in important ways, and pretending that trade policy in imperfectly competitive markets takes place in the absence of any competition policy may lead to inadvertent policy outcomes.

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Paper provided by Research Seminar in International Economics, University of Michigan in its series Working Papers with number 362.

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Length: 28 pages
Date of creation: 1994
Date of revision:
Handle: RePEc:mie:wpaper:362
Contact details of provider: Postal: ANN ARBOR MICHIGAN 48109
Web page: http://fordschool.umich.edu/rsie/

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  1. Salant, Stephen W & Switzer, Sheldon & Reynolds, Robert J, 1983. "Losses from Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 98(2), pages 185-99, May.
  2. Joseph Farrell and Carl Shapiro., 1988. "Horizontal Mergers: An Equilibrium Analysis," Economics Working Papers 8880, University of California at Berkeley.
  3. Raymond Deneckere & Carl Davidson, 1985. "Incentives to Form Coalitions with Bertrand Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 473-486, Winter.
  4. Larson, David A, 1970. "An Economic Analysis of the Webb-Pomerene Act," Journal of Law and Economics, University of Chicago Press, vol. 13(2), pages 461-500, October.
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