Trade Liberalization and Cartel Stability

K.E. Lommerund and Lars Sørgard
Authors registered in the RePEc Author Service: Kjell Erik Lommerud ()

Norway; Department of Economics, University of Bergen from Department of Economics, University of Bergen

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.

Keywords: TRADE LIBERALIZATION; CARTELS (search for similar items in EconPapers)
JEL-codes: F13 F14 L4 (search for similar items in EconPapers)
Pages: 24 pages
Date: 1998
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Citations: View citations in EconPapers (6)

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Journal Article: Trade Liberalization and Cartel Stability (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:bereco:0198

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