Center for Economic Studies Working Paper at University of Munich, No. 166
Posted: 9 Aug 1998
Date Written: June 1998
This paper shows that moving from market segmentation to market integration (i.e. firms can no longer discriminate among markets) may have anti-competitive effects in a repeated game setting in which a simple trigger strategy is the enforcement strategy. In particular, we show that two countries can never both experience pro-competitive gains and that two similar countries always both experience anti-competitive effects from market integration. We show that the same conclusions hold when trade liberalization is understood as being a decrease in bilateral barriers to trade followed by the switch from market segmentation to market integration.
JEL Classification: F12, F15, L41
Suggested Citation: Suggested Citation
Schmitt, Nicolas and Colonescu, Constantin, Market Segmentation, Market Integration and Tacit Collusion (June 1998). Center for Economic Studies Working Paper at University of Munich, No. 166. Available at SSRN: https://ssrn.com/abstract=111474