On multimarket collusion and trade policies

Shiva Sikdar

Economics Letters, 2023, vol. 233, issue C

Abstract: We analyze the impact of strategic government policies on trade and welfare when an international duopoly sells differentiated products in geographically-separated markets, and cross-hauling incurs a transportation cost. We compare competition between firms to multimarket collusion. In contrast to no-policy settings, where trade volumes are lower under collusion than under competition, with strategic trade policies, the volume of trade is lower under competition. Collusion increases trade, resulting in higher welfare relative to competition.

Keywords: Multimarket collusion; Cross-hauling; Strategic trade policy; Tariffs; Differentiated goods (search for similar items in EconPapers)
JEL-codes: D43 F13 L13 L41 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:233:y:2023:i:c:s016517652300455x

DOI: 10.1016/j.econlet.2023.111429

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