Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/174952
Authors: 
Agnosteva, Delina
Syropoulos, Constantinos
Yotov, Yoto V.
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper 6829
Abstract: 
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.
Subjects: 
endogenous cartel discipline
competitiveness
multimarket contact
welfare
trade flows
trade costs
trade policy
gravity
JEL: 
D43
F10
F12
F13
F15
F42
L12
L13
L41
Document Type: 
Working Paper
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