Market Structure, Tariff Lobbying and the Free-Rider Problem

Abstract

The effect of changes in industry structure on the ability to maintain a cooperative level of tariff lobbying are analyzed in a repeated game setting in which a simple trigger strategy is the enforcement mechanism. The difficulty of maintaining cooperation is identified with the minimum discount factor necessary for the maintenance of cooperation. Factors which increase this critical value of the discount parameter are said to make cooperation more difficult. Some changes in industry structure which reduce measured concentration have ambiguous effects, while others may make cooperation among a given group of firms more likely.

JEL Classification: D7 F13