The Empirics of Private Restraints and International Trade: What Can Policymakers Learn from the Economic Literature?

The ongoing debate on the merits of taking state action against private firms, whose practices have allegedly restricted market access, has made little reference to the policy implications of economic analyses of those practices. This disconnect between economic research and policymaking in one critical overlap between trade and competition policy is troubling, especially as these matters are receiving greater attention in the run up to the launch of the next multilateral trade round.

In this report we examine what are the policy implications of the empirical literature on private restraints and market access in general, and on international cartels in particular. Although our focus is on empirical findings this is not to downplay the important role that conceptual frameworks play in structuring analyses and formulating explicit hypotheses. The following questions are addressed: Does the economic literature shed light on the prevalence and effects of such private practices and cartels? What evidence or procedures can be reliably used to detect the existence of a market access restricting private practices and cartels? Are there satisfactory methods for quantifying the effects of such private practices and cartels? If not, are there alternative means to filter allegations of private practices or cartel-like behavior?