Quotas and the Stability of Implicit Collusion
Working Paper 1948
DOI 10.3386/w1948
Issue Date
This paper shows that the imposition of an import quota by one country
can lead to increased competitiveness; protection can reduce the price in the
country that imposes the quota, the foreign country, or both. This emerges
from a model in which the firms are assumed to sustain collusion by the threat
of reversion to more competitive pricing. We consider both prices and
quantities as the strategic variables and study competition both in the
domestic and the foreign market taken individually, and in the two markets
taken together.
Published Versions
"Tariffs Vs. Quotas with Implicit Collusion," Canadian Journal of Economics , Vol. 22, No. 2, pp. 237-244, May 1989.