Cartel Stability and Economic Integration
No 432, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research
This paper investigates the effect of economic integration on the ability of firms to maintain a collusive understanding about staying out of each other's markets. The paper distinguishes among different types of trade costs: ad valorem, unit, fixed. It is shown that for a sufficient reduction of ad valorem trade costs, a cartel supported by collusion on either quantities or prices will be weakened, thus integration is pro-competitive. If integration consists of a reductions in unit (fixed) trade costs a price setting cartel is strengthened (unaffected), while a quantity setting one is weakened.
Keywords: Collusive behavior; Trade liberalisation; Specific tariffs; Market access cost (search for similar items in EconPapers)
JEL-codes: F15 L13 L12 F12 (search for similar items in EconPapers)
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Journal Article: Cartel Stability and Economic Integration (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:diw:diwwpp:dp432
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