This paper benefited from the comments of Paul Gregory, Henrik Horn, Pascalis Raimondos-Møller, and the participants of the 6th NOITS workshop and the 30th EARIE annual conference. The author is responsible for any remaining errors. The author gratefully acknowledges financial support from the Danish Social Science Research Council.
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Cartel Stability and Economic Integration
Article first published online: 26 APR 2007
DOI: 10.1111/j.1467-9396.2007.00646.x
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How to Cite
Schröder, P. J. H. (2007), Cartel Stability and Economic Integration. Review of International Economics, 15: 313–320. doi: 10.1111/j.1467-9396.2007.00646.x
Publication History
- Issue published online: 26 APR 2007
- Article first published online: 26 APR 2007
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Abstract
This paper revisits the notion that economic integration—modeled as a reduction of trade costs—may be anticompetitive, in the sense that it may reinforce the ability of an international cartel to maintain a collusive understanding about staying out of each other’s markets. The paper is novel in terms of introducing ad valorem and fixed trade costs in addition to the customary unit trade costs. It is shown that an anticompetitive effect, found for reductions in unit trade costs, may disappear once trade costs are ad valorem or fixed.