Quotas and the Stability of Implicit Collusion

Julio J. Rotemberg, Garth Saloner

NBER Working Paper No. 1948
Issued in June 1986
NBER Program(s):   ITI   IFM

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.

(278 K)

Published: "Tariffs Vs. Quotas with Implicit Collusion," Canadian Journal of Economics , Vol. 22, No. 2, pp. 237-244, May 1989.

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