Cartel Stability and Economic Integration

Philipp Schröder

No 432, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: 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: F12 F15 L12 L13 (search for similar items in EconPapers)
Pages: 23 p.
Date: 2004
New Economics Papers: this item is included in nep-com
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Related works:
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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