National champions and globalization
AbstractIn this paper, we offer an explanation why globalization (falling trade costs) may increase the government incentive to block foreign takeover of domestic firms and increase its incentive to allow mergers among national firms. This creation of `national champions' occurs not only because the government may have a bias against foreign takeover, but also because consumer welfare gains associated with foreign acquisitions decrease with globalization. Endogenizing the government bias through lobbying efforts of the domestic firms, the paper shows that the bias does not need to be very strong before the government promotes domestic champions provided that barriers to trade are low.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 43 (2010)
Issue (Month): 1 (February)
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Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4
Web page: http://economics.ca/cje/
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- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
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- L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
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