Preferential trade liberalization with endogenous cartel discipline: Implications for trade and welfare
研究了优惠贸易协定中卡特尔成员因市场关联而调整销售，导致贸易转移和福利下降的条件，对贸易政策制定者评估优惠贸易自由化效果有参考价值。
Abstract We consider an international cartel whose members interact repeatedly in their own as well as in third‐country markets. Cartel discipline—an inverse measure of the degree of competition between firms—is endogenously determined by the cartel's incentive compatibility constraint, which strategically links markets that are otherwise independent. This linkage implies that trade cost reductions induce cartel members to adjust their sales, not only because of direct but also because of spillover effects. We apply these ideas to preferential trade agreements and show that the indirect effects can give rise to trade diversion. We also characterize the welfare effects of preferential tariff cuts for all countries and identify circumstances under which preferential trade liberalization is welfare‐reducing.