Multimarket Linkages, Cartel Discipline and Trade Costs

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 6829

Classification and Topics

• Classification: Wirtschaft ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Trade: General ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Trade Policy; International Trade Organizations ; Economic Integration ; International Policy Coordination and Transmission ; Monopoly; Monopolization Strategies ; Oligopoly and Other Imperfect Markets ; Monopolization; Horizontal Anticompetitive Practices
• Subject: endogenous cartel discipline ; competitiveness ; multimarket contact ; welfare ; trade flows ; trade costs ; trade policy ; gravity

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Agnosteva, Delina ; Syropoulos, Constantinos ; Yotov, Yoto V.
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/174952
• Last update: 10.03.2025, 11:43 AM CET