On multimarket collusion and trade policies

Sikdar, Shiva

Abstract

We analyze the impact of strategic government policies on trade and welfare when an international duopoly sells differentiated products in geographically-separated markets, and cross-hauling incurs a transportation cost. We compare competition between firms to multimarket collusion. In contrast to no-policy settings, where trade volumes are lower under collusion than under competition, with strategic trade policies, the volume of trade is lower under competition. Collusion increases trade, resulting in higher welfare relative to competition.

Citation

Sikdar, S. (2023). On multimarket collusion and trade policies. Economics Letters, 233, Article 111429. https://doi.org/10.1016/j.econlet.2023.111429

• Journal Article Type: Article
• Acceptance Date: Oct 31, 2023
• Online Publication Date: Nov 8, 2023
• Publication Date: 2023-11
• Deposit Date: Nov 14, 2023
• Journal: Economics Letters
• Print ISSN: 0165-1765
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 233
• Article Number: 111429
• DOI: https://doi.org/10.1016/j.econlet.2023.111429
• Keywords: Multimarket collusion; Cross-hauling; Strategic trade policy; Tariffs; Differentiated goods
• Additional Information: This article is maintained by: Elsevier; Article Title: On multimarket collusion and trade policies; Journal Title: Economics Letters; CrossRef DOI link to publisher maintained version: https://doi.org/10.1016/j.econlet.2023.111429; Content Type: article; Copyright: Crown Copyright © 2023 Published by Elsevier B.V.