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Author: Eric W. Bond Publisher: ISBN: Category : Languages : en Pages : 48
Book Description
This paper explores the implications of reciprocal trade liberalization for implicit collusion and welfare in the context of a symmetric, homogeneous goods duopoly model with multi-market contact and quantity competition. One of our principal findings is that collusive conduct does not necessarily entail geographic separation of markets and cessation of intra-industry trade. Our analysis also reveals that, when trade costs and discount factors are not too high, efficient cartel agreements that involve the cross hauling of goods are easier to sustain because they circumscribe deviation incentives. As a consequence, for a certain range of discount factors, welfare is higher when there are no trade costs than when trade costs are so high that they eliminate trade. This establishes an important sense in which trade liberalization is pro-collusive in the neighborhood of unimpeded (i.e., free) trade. In contrast, reductions in trade costs are welfare-improving when they are high enough to eliminate trade flows in the efficient cartel agreement. The analysis examines both tariffs and transport costs and compares their effects on welfare. The model is also extended to consider the presence of more than one firm per country and to study the implications of imperfect substitutability in demand.
Author: Eric W. Bond Publisher: ISBN: Category : Languages : en Pages : 48
Book Description
This paper explores the implications of reciprocal trade liberalization for implicit collusion and welfare in the context of a symmetric, homogeneous goods duopoly model with multi-market contact and quantity competition. One of our principal findings is that collusive conduct does not necessarily entail geographic separation of markets and cessation of intra-industry trade. Our analysis also reveals that, when trade costs and discount factors are not too high, efficient cartel agreements that involve the cross hauling of goods are easier to sustain because they circumscribe deviation incentives. As a consequence, for a certain range of discount factors, welfare is higher when there are no trade costs than when trade costs are so high that they eliminate trade. This establishes an important sense in which trade liberalization is pro-collusive in the neighborhood of unimpeded (i.e., free) trade. In contrast, reductions in trade costs are welfare-improving when they are high enough to eliminate trade flows in the efficient cartel agreement. The analysis examines both tariffs and transport costs and compares their effects on welfare. The model is also extended to consider the presence of more than one firm per country and to study the implications of imperfect substitutability in demand.
Author: Delina Agnosteva Publisher: ISBN: Category : Languages : en Pages : 94
Book Description
We build a model of tacit collusion between firms that operate in multiple markets to study the effects of trade costs. A key feature of the model is that cartel discipline is endogenous. Thus, markets that appear segmented are strategically linked via the incentive compatibility constraint. Importantly, trade costs affect cartel shipments and welfare not only directly but also indirectly through discipline. Using extensive data on international cartels, we find that trade costs exert a negative and significant effect on cartel discipline. In turn, cartel discipline has a negative and significant impact on trade flows, in line with the model.
Author: Delina Emilova Agnosteva Publisher: ISBN: Category : Cartels Languages : en Pages : 422
Book Description
My dissertation studies the links between international cartels and international trade both theoretically and empirically. In the first section of my dissertation, I examine the implications of collusion for trade and welfare in the context of two different theoretical frameworks. First, I build a quantity-setting duopoly model of multi-product firms which interact repeatedly in national markets separated by trade costs to study the impact of collusion on trade and welfare. Each firm produces two goods but has a competitive cost advantage in one. In this setting, an international cartel can choose to shut down production of the inefficiently produced good and import it instead, and thus, can promote trade relative to competition. Further, the cartel extracts surplus by exploiting its market power, but also generates efficiency gains by rationalizing production and trade. Therefore, maximal collusion can welfare-dominate Cournot competition regardless of whether trade costs take the form of transportation costs or import tariffs. Second, I construct a multi-market duopoly model to study the consequences of economic integration for collusive discipline, optimal shipments, and welfare. Firms interact repeatedly in quantities in each other's home markets as well as in third-country markets. When the no-deviation constraint is active, national markets become strategically linked and thus internal and external trade liberalization affects output deliveries and welfare levels in all countries. I characterize the dependence of collusive stability and cartel discipline on trade costs and relative market size. I derive novel results regarding the impact of economic integration on national welfare. For instance, the analysis shows that regional trade liberalization can hurt all countries and the absence of internal trade might be welfare-superior to free internal trade to all nations. In the second chapter, I describe the novel data on international cartels that I have hand-collected. The cartel data cover 173 international cartels and include information on the exact duration of the cartels, the countries of nationality of the cartel-members, as well as the 6-digit product code of the goods subject to collusive activities. Moreover, the data contain various cartel characteristics pertaining to the instruments of collusion (i.e., price-fixing, bid-rigging, sales quotas) as well as details on the practices adopted by the cartel members and the scope of collusion (i.e., cartel's market share). I merge the cartel dataset with the most disaggregated trade data available, standard proxies for trade costs, and product substitutability. In the last chapter, I analyze the empirical linkages between cartels and trade. First, I find that the average effect of cartels on trade is positive and significant. With regards to the effects of multi-product collusion on bilateral trade, the results show that the impact of multi-product cartels on trade is positive, significant and statistically larger than the effect of single-product cartels, consistent with my model. The positive and significant impact of multi-product cartels on trade becomes more pronounced when the goods are sufficiently unrelated, in line with the theoretical model. Moreover, I propose a two-stage estimation procedure to examine empirically 1) the relations between cartel discipline and (internal and external) trade costs; 2) the relation between (internal and external) trade and cartel discipline. As predicted by the theory, both internal trade costs and external trade costs are inversely related to collusive discipline. Using the first-stage estimates, I construct different measures of cartel discipline, and in the second-stage analysis I find the effect of cartel discipline on both internal and external trade to be negative and significant, in line with the theoretical predictions.
Author: Rimjhim Singh Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
This paper presents a critical comparison of the four major papers on territorial allocation by Bernheim and Whinston, Lommerud and Sorgard, Schroder, and Bhattacharjea and Sinha. The paper adds a new dimension to the analysis as it also studies the impact of a change in distance on collusion and establishes the distance paradox which states that collusion is facilitated with a unit fall in the distance.
Author: E. Kwan Choi Publisher: John Wiley & Sons ISBN: 1405142510 Category : Business & Economics Languages : en Pages : 592
Book Description
This second volume of the Handbook of International Tradefocuses on the economic and legal analysis of international lawsand institutions as they impact trade. Containing chapters written by both economic and legal scholars,this volume encourages cross-discipline discussion with writingthat is accessible to those approaching the material from anybackground. Central issues to those studying international trade areaddressed, including: labor, environmental rights, and preferential tradeagreements antitrust policy patent rights trade liberalization foreign direct investment.
Author: Manfred Neumann Publisher: Edward Elgar Publishing ISBN: 1849806063 Category : Law Languages : en Pages : 431
Book Description
ÔThis comprehensive Handbook demonstrates that academic thinking, new and old, has a role to play in shaping modern competition policy.Õ Ð Gunnar Niels, Oxera This indispensable Handbook examines the interface of competition policy, competition law and industrial economics. The book aims to further our understanding of how economic reasoning and legal expertise complement each other in defining the fundamental issues and principles in competition policy. In specially commissioned chapters the book provides a scholarly review of economic theory, empirical evidence and standards of legal evaluation with respect to monopolization of markets, exploitation of market power and mergers, among other issues. The International Handbook of Competition Ð Second Edition will be accessible to a wide audience including students of economics and law, public administrators, lawyers, consultants, and business executives.
Author: Michael Dennis Whinston Publisher: ISBN: Category : Business & Economics Languages : en Pages : 272
Book Description
Antitrust law regulates economic activity but differs in its operation from what is traditionally considered "regulation." Where regulation is often industry-specific and involves the direct setting of prices, product characteristics, or entry, antitrust law focuses more broadly on maintaining certain basic rules of competition. In these lectures Michael Whinston offers an accessible and lucid account of the economics behind antitrust law, looking at some of the most recent developments in antitrust economics and highlighting areas that require further research. He focuses on three areas: price fixing, in which competitors agree to restrict output or raise price; horizontal mergers, in which competitors agree to merge their operations; and exclusionary vertical contracts, in which a competitor seeks to exclude a rival. Antitrust commentators widely regard the prohibition on price fixing as the most settled and economically sound area of antitrust. Whinston's discussion seeks to unsettle this view, suggesting that some fundamental issues in this area are, in fact, not well understood. In his discussion of horizontal mergers, Whinston describes the substantial advances in recent theoretical and empirical work and suggests fruitful directions for further research. The complex area of exclusionary vertical contracts is perhaps the most controversial in antitrust. The influential "Chicago School" cast doubt on arguments that vertical contracts could be profitably used to exclude rivals. Recent theoretical work, to which Whinston has made important contributions, instead shows that such contracts can be profitable tools for exclusion. Whinston's discussion sheds light on the controversy in this area and the nature of those recent theoretical contributions. Sponsored by the Universidad Torcuato Di Tella
Author: Ulrich Schwalbe Publisher: Oxford University Press ISBN: 0199571813 Category : Business & Economics Languages : en Pages : 477
Book Description
Co-written by an expert lawyer and economist, this book provides a thorough guide to the economic theory behind the regulation of mergers. The economic theory is then used to analyse the current state of European competition law, and test the success of the European Commission's search for a 'more economic approach' to merger regulation.
Author: Eric W. Bond
Author: Eric W. Bond
Author: Delina Agnosteva
Author: Delina Emilova Agnosteva
Author: Barbara Böhnlein
Author: Rimjhim Singh
Author: Malcolm B. Coate
Author: E. Kwan Choi
Author: Manfred Neumann
Author: Michael Dennis Whinston
Author: Ulrich Schwalbe