Abstract

http://ssrn.com/abstract=2167515
 
 

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Social-Welfare-Enhancing Collusion and Trade


George Deltas


University of Illinois at Urbana-Champaign - Department of Economics

Alberto Salvo


Northwestern University - Kellogg School of Management

Helder Vasconcelos


Universidade do Porto - Faculdade de Economia (FEP)

2012

Recent Advances in the Analysis of Competition Policy and Regulation, Joseph E. Harrington, Yannis Katsoulacos, and Pierre Regibeau, eds., pp. 140-160, Elgar Publishing, August 2012

Abstract:     
Deltas, Salvo and Vasconcelos (2011) develop a model of geographically separated markets with differentiated goods in which collusion (or merger to monopoly), by restricting trade relative to duopolistic competition, is beneficial for society and can be beneficial for consumers. In this chapter, we provide additional results as well as an extension of that model. We show that a social planner would further restrict trade than the perfect cartel would, and how the socially optimal market allocation can be induced through a system of taxes and subsidies, or through "anti-dumping" regulation. We generalize the model to allow for home biased consumer tastes and show that our original analysis is robust. We also consider whether autarky can improve social welfare over market-based trade regimes, in the spirit of Brander and Krugman (1983).

Keywords: Cross-hauling, Cartels, Coordinated Effects, Home Bias, Market Allocation Schemes, Home-market Principle, Two-way Trade

JEL Classification: F12, L41, D43

Accepted Paper Series





Not Available For Download

Date posted: October 28, 2012  

Suggested Citation

Deltas, George and Salvo, Alberto and Vasconcelos, Helder, Social-Welfare-Enhancing Collusion and Trade (2012). Recent Advances in the Analysis of Competition Policy and Regulation, Joseph E. Harrington, Yannis Katsoulacos, and Pierre Regibeau, eds., pp. 140-160, Elgar Publishing, August 2012. Available at SSRN: http://ssrn.com/abstract=2167515

Contact Information

George Deltas (Contact Author)
University of Illinois at Urbana-Champaign - Department of Economics ( email )
1206 South Sixth Street
450 Commerce West
Champaign, IL 61820
United States
217-333-4586 (Phone)
217-244-6678 (Fax)
Alberto Salvo
Northwestern University - Kellogg School of Management ( email )
2001 Sheridan Road
Evanston, IL 60208
United States
HOME PAGE: http://www.kellogg.northwestern.edu/faculty/directory/salvo_alberto.aspx
Helder Vasconcelos
Universidade do Porto - Faculdade de Economia (FEP) ( email )
Rua Dr. Roberto Frias
s/n
4200-464 Porto, 4200-464
Portugal
HOME PAGE: http://www.fep.up.pt/docentes/hvasconcelos
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