Market segmentation, market integration, and tacit collusion

Author
Colonescu, Constantin
Schmitt, Nicolas
Faculty Advisor
Date
2003
Keywords
markets , free trade , competition
Abstract (summary)
Moving from market segmentation to market integration (firms cannot discriminate among markets) is shown to have often anticompetitive effects in an infinitely repeated Cournot game. In particular, market integration between two countries leads both of them to experience anticompetitive effects when product markets are similar. The same conclusion holds when trade liberalization is modeled as a decrease in bilateral trade barriers followed by moving from market segmentation to market integration. The analysis also predicts that a less efficient country (like a country in transition) enjoys pro–competitive effects from market integration.
Publication Information
Colonescu, C., & Schmitt, N. (2003). Market segmentation, market integration, and tacit collusion. Review of International Economics, 11(1): 175-192. doi:10.1111/1467-9396.00376
DOI
Notes
Item Type
Article
Language
English
Rights
All Rights Reserved