EconPapers    
Economics at your fingertips  
 

The effect of competition on trade: Evidence from the collapse of international cartels

Margaret Levenstein, Jagadeesh Sivadasan and Valerie Suslow

International Journal of Industrial Organization, 2015, vol. 39, issue C, 56-70

Abstract: How do changes in competitive intensity affect trade patterns? Some cartels may find it advantageous to eliminate cross-hauling and divide markets geographically. We exploit a quasi-natural experiment associated with increased antitrust enforcement to determine if market division strategies were used in seven recently-prosecuted international cartels. Since antitrust activity is unlikely to affect spatial patterns of demand and supply (other than through its effect on the competitive environment), enforcement-induced changes are ideally suited to study the effect of competition on trade patterns. Analyzing the cartels individually and as a group, we find no significant change in spatial patterns of trade following cartel breakup; in particular, there is no systematic change in the effect of distance on trade. These results suggest that cross-hauling is not uncommon under collusion and hence that the existence of cross-hauling by itself does not provide evidence of effective competition.

Keywords: Multimarket collusion; Gravity; Cross-hauling; Cartels; Market allocation; Antitrust policy (search for similar items in EconPapers)
JEL-codes: F12 F23 D43 D21 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167718715000156
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:39:y:2015:i:c:p:56-70

Access Statistics for this article

International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal

More articles in International Journal of Industrial Organization from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-09-18
Handle: RePEc:eee:indorg:v:39:y:2015:i:c:p:56-70