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Economic integration and the sustainability of multimarket collusion
Journal article   Peer reviewed

Economic integration and the sustainability of multimarket collusion

Eric W. Bond and Constantinos Syropoulos
Economics letters, v 117(1), pp 42-44
01 Oct 2012
DOI: https://doi.org/10.1016/j.econlet.2012.04.052
Featured in Collection :   UN Sustainable Development Goals @ Drexel

Abstract

Business & Economics Economics Social Sciences
We examine the impact of (and links between) two types of economic integration on the stability of multimarket collusion when firms interact in quantities in segmented markets: (1) multilateral trade liberalization, captured by a reduction of trade costs across all markets; and (2) preferential trade liberalization, captured by an expansion in the size of individual markets while holding the level of external trade costs (tariffs) constant. In general, collusive stability is non-monotonically related to economic integration. In the case of multilateral liberalization, the effect depends on the initial level of trade costs and the extent of liberalization. However, on the average, the complete elimination of trade costs is pro-competitive when these costs are sufficiently high initially. In the case of regional integration, the effect of liberalization is pro-competitive when external trade barriers are sufficiently high, but anti-competitive when these barriers are sufficiently low. (C) 2012 Elsevier B.V. All rights reserved.

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Domestic collaboration
Web of Science research areas
Economics
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