Cartel Stability and Economic Integration

Philipp Schröder

Cartel Stability and Economic Integration

Research output: Working paper/Preprint › Working paper › 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 suffcient 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.

Translated title of the contribution	Cartel Stability and Economic Integration
Original language	English
Publication status	Published - 2004

Keywords

trade liberalisation
colussion

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Cite this

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