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Market segmentation, market integration, and tacit collusion

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

Notes

Item Type

Article

Language

English

Rights

All Rights Reserved