The effect of competition on trade: : Evidence from the collapse of international cartels

• Autores: Margaret C. Levenstein, Jagadeesh Sivadasan, Valerie Y. Suslow
• Localización: International journal of industrial organization, ISSN 0167-7187, Vol. 39, Nº. 1, 2015, págs. 56-70
• Idioma: inglés
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• Resumen

  • How do changes in competitive intensity affect trade patterns? Some cartels may find it advantageous to eliminate cross-hauling and divide markets geographically. We exploit a quasi-natural experiment associated with increased antitrust enforcement to determine if market division strategies were used in seven recently-prosecuted international cartels. Since antitrust activity is unlikely to affect spatial patterns of demand and supply (other than through its effect on the competitive environment), enforcement-induced changes are ideally suited to study the effect of competition on trade patterns. Analyzing the cartels individually and as a group, we find no significant change in spatial patterns of trade following cartel breakup; in particular, there is no systematic change in the effect of distance on trade. These results suggest that cross-hauling is not uncommon under collusion and hence that the existence of cross-hauling by itself does not provide evidence of effective competition.