Trading Market Access for Competition Policy Enforcement

Motivated by discussions at the World Trade Organization (WTO) on multilateral disciplines with respect to competition law, the authors develop a two-country model that explores the incentives of a developing country to offer increased market access (by way of a tariff reduction) in exchange for a ban on foreign export cartels by its developed country trading partner. They show that such a bargain is feasible and can generate a globally welfare-maximizing outcome. The authors also explore the incentives for bilateral cooperation when the developing country uses transfers to "pay" for competition enforcement by the developed country. A comparison of the two cases shows that there exist circumstances in which the stick (the tariff) is more effective in sustaining bilateral cooperation than the carrot (the transfer). Furthermore, the scope for cooperation is maximized when both instruments are used. An implication of the analysis is that developing countries have incentives to support an explicit WTO prohibition of export cartels.

Bibliographic Details

Main Authors:	Saggi, Kamal, Hoekman, Bernard
Language:	English en_US
Published:	World Bank, Washington, D.C. 2004-01
Subjects:	MARKET ACCESS; TRADING ARRANGEMENTS; COMPETITION POLICY; MULTILATERAL AGREEMENTS; COMPETITION LAW & LEGISLATION; TARIFF REDUCTIONS; EXPORT COMPETITIVENESS; TRADE REGULATION; WELFARE ECONOMICS; BILATERAL TRADE; LAW ENFORCEMENT; CASE STUDIES; TRANSFER BENEFITS; CARTELS; ACCESS TO MARKETS, ANTI-COMPETITIVE PRACTICES, ANTITRUST ENFORCEMENT, ANTITRUST LAW, ANTITRUST LAWS, BERTRAND COMPETITION, BILATERAL COOPERATION, CARTEL, COMPETITION AUTHORITIES, COMPETITION LAW, COMPETITION LAW ENFORCEMENT, COMPETITION POLICIES, COMPETITION POLICY, COMPETITIVE PRACTICES, CONCESSIONS, CONSTANT RETURNS TO SCALE, CONSUMER SURPLUS, CONSUMERS, COURNOT COMPETITION, DEMAND CURVE, DEVELOPED COUNTRIES, DEVELOPMENT ASSISTANCE, DISPUTE SETTLEMENT, DOMESTIC PRODUCTION, EMPIRICAL EVIDENCE, EQUILIBRIUM, EXPORT CARTELS, EXPORT MARKETS, EXPORTERS, EXPORTS, EXTERNALITIES, FOREIGN COMPETITION, FOREIGN FIRMS, FOREIGN MARKETS, FREE TRADE, GDP, GROSS DOMESTIC PRODUCT, IMPORTS, INTERNATIONAL TRADE, LDCS, MARGINAL COST, MARGINAL COST OF PRODUCTION, MARGINAL COST PRICING, MARKET ACCESS, MARKET COMPETITION, MARKET POWER, MARKET STRUCTURE, MERGERS, MULTILATERAL DISCIPLINES, MULTINATIONAL ENTERPRISES, NASH EQUILIBRIUM, NATIONAL COMPETITION, NATIONAL COMPETITION LAW, NATIONAL COMPETITION POLICIES, NATIONAL MARKET, NEGATIVE EXTERNALITIES, OLIGOPOLY, OPTIMIZATION, PERFECT COMPETITION, POLICY DECISIONS, PRICE COMPETITION, PRODUCTION COSTS, RECIPROCITY, SUBSTITUTES, TARIFF RATE, TARIFF REDUCTION, TARIFF REVENUE, TOTAL OUTPUT, TRADE MOTIVES, TRADE NEGOTIATIONS, TRADE POLICY, TRADE POLICY INSTRUMENTS, TRANSPORT COSTS, WILLINGNESS TO PAY, WORLD TRADE, WORLD TRADE ORGANIZATION, WTO, ZERO TARIFF,
Online Access:	http://documents.worldbank.org/curated/en/2004/01/2892893/trading-market-access-competition-policy-enforcement https://hdl.handle.net/10986/14193
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