Endogenous Vertical Restraints in International Trade

Horst Raff and Nicolas Schmitt

No 284, CESifo Working Paper Series from CESifo

Abstract: This paper examines interbrand competition between a domestic and a foreign manufacturer who market their products through intermediaries. The contracts manufacturers offer these intermediaries are endogenous. In equilibrium contracts may specify exclusive territories (ET), depending on the degree of substitutability between products and the level and degree of transparency of trade barriers. Trade liberalization, through lower or more transparent barriers, may lead manufacturers to use ET, thereby substituting private anti-competitive arrangements for government-imposed barriers. This substitution may decrease competition and welfare, and thus create a role for competition policy in a freer trade environment.

Date: 2000
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Endogenous vertical restraints in international trade (2005)
Working Paper: Endogenous Vertical Restraints in International Trade (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_284

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