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Mergers and Trade Policy under Oligopoly

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Author Info
David R. Collie (Cardiff University, UK)

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Abstract

For an oligopolistic industry, the effects of mergers on the domestic country"s optimal trade policy are analyzed. If the domestic country pursues an optimal trade policy then it will always lose as a result of a foreign merger. The optimal domestic response to a foreign merger is to decrease (increase) the tariff if demand is concave (convex) and to increase the production subsidy. The foreign merger reduces foreign welfare when the domestic country pursues its optimal trade policy. The optimal domestic response to a domestic merger is to leave the tariff unchanged and to increase the production subsidy. Copyright Blackwell Publishing Ltd. 2003

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Publisher Info
Article provided by Blackwell Publishing in its journal Review of International Economics.

Volume (Year): 11 (2003)
Issue (Month): 1 (February)
Pages: 55-71
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Handle: RePEc:bla:reviec:v:11:y:2003:i:1:p:55-71

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  1. GAUDET, Gérard & KANOUNI, Rams, 2001. "Trade Liberalization and the Profitability of Domestic Mergers," Cahiers de recherche 2001-28, Universite de Montreal, Departement de sciences economiques. [Downloadable!]
    Other versions:
  2. Ray Chaudhuri, A., 2008. "A Dynamic Model of Endogenous Mergers and Trade Liberalization," Discussion Paper 2008-005, Tilburg University, Tilburg Law and Economic Center. [Downloadable!]
    Other versions:
  3. Calmette, Marie-Françoise, 2007. "The Effects of Trade Liberalization Between High and Low Cost Countries when Merger Behavior is Endogenous," IDEI Working Papers 394, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
  4. James Gaisford & Stefan Lutz, 2007. "A Multi-Product Framework Generating Waves of Mergers and Divestitures," ICER Working Papers 36-2007, ICER - International Centre for Economic Research. [Downloadable!]
  5. Aidan Hollis, 2003. "Industrial Concentration, Output, and Trade: An Empirical Exploration," Review of Industrial Organization, Springer, vol. 22(2), pages 103-119, March. [Downloadable!] (restricted)
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  6. Hoekman, Bernard, 1998. "Free trade and deep integration : antidumping and antitrust in regional agreements," Policy Research Working Paper Series 1950, The World Bank. [Downloadable!]
  7. Ray Chaudhuri, A. & Benchekroun, H., 2008. "Welfare Effect of Mergers and Trade Liberalization," Discussion Paper 2008-009, Tilburg University, Tilburg Law and Economic Center. [Downloadable!]
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  8. Lommerud, Kjell Erik & Sørgard, Lars & Straume, Odd Rune, 2003. "National versus International Mergers in Unionised Oligopoly," CEPR Discussion Papers 4040, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  9. Rafael S. Espinosa Ramírez & M. Ozgur Kayalica, 2007. "Environmental Policies and Mergers’ Externalities," Economia Mexicana NUEVA EPOCA, , vol. 0(1), pages 47-74, January-J. [Downloadable!]
  10. Joseph F. Francois & Henrik Horn, 1998. "Competition Policy in an Open Economy," Tinbergen Institute Discussion Papers 98-092/2, Tinbergen Institute. [Downloadable!]
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