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

M. Dolores Alepuz and Santiago Jose Rubio ()
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M. Dolores Alepuz: University of Valencia

Investigaciones Economicas, 2009, vol. 33, issue 1, pages 39-68

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.

Keywords: Self-enforcing tariff agreements; integrated markets; rent-shifting hypothesis. (search for similar items in EconPapers)
JEL-codes: D42 F13 (search for similar items in EconPapers)
Date: 2009

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