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Endogenous Vertical Restraints In International TradeHorst RaffChristian-Albrechts-Universitaet zu Kiel; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Kiel Institute for the World Economy Nicolas SchmittSimon Fraser University; CESifo (Center for Economic Studies and Ifo Institute for Economic Research) April 2000 CESifo Working Paper Series No. 284 Abstract: this paper examines interbrand competition between a domestic and a foreign manufacturer who market their products through intermediaries. the contracts manufacturers offer these intermediaries are endogenous. in equilibrium contracts may specify exclusive territories (et), depending on the degree of substitutability between products and the level and degree of transparency of trade barriers. trade liberalization, through lower or more transparent barriers, may lead manufacturers to use et, thereby substituting private anti-competitive arrangements for government-imposed barriers. this substitution may decrease competition and welfare, and thus create a role for competition policy in a freer trade environment.
Number of Pages in PDF File: 39 JEL Classification: F13, L42 working papers seriesDate posted: March 22, 2001Suggested CitationContact Information
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