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 acces...
| Main Authors: | , |
|---|---|
| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2004/01/2892893/trading-market-access-competition-policy-enforcement http://hdl.handle.net/10986/14193 |
| Summary: | 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. |
|---|