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Market Segmentation, Market Integration and Tacit Collusion

Center for Economic Studies Working Paper at University of Munich, No. 166

Posted: 9 Aug 1998  

Nicolas Schmitt

Simon Fraser University; CESifo (Center for Economic Studies and Ifo Institute)

Constantin Colonescu

American University in Bulgaria

Multiple version iconThere are 2 versions of this paper

Date Written: June 1998

Abstract

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

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

Nicolas Schmitt (Contact Author)

Simon Fraser University ( email )

Department of Economics
8888 University Drive
Burnaby, BC V5A 1S6
Canada
604 291 4582 (Phone)

HOME PAGE: http://www.sfu.ca/~schmitt/

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Constantin Colonescu

American University in Bulgaria ( email )

Blagoevgrad, 2700
Bulgaria

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