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Trade liberalization and industrial restructuring through mergers and acquisitions

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  • Breinlich, Holger

Abstract

This paper analyzes mergers and acquisitions (M&As) as a channel of industrial restructuring after trade liberalization. Using the Canada-United States Free Trade Agreement (CUSFTA) of 1989 as a source of exogenous variation in trade barriers, I show that trade liberalization increased domestic Canadian M&A activity (Canadian firms buying other Canadian firms) by over 70%. There is no robust link between tariff reductions and either domestic U.S. or cross-border M&As. I also provide evidence that domestic M&As transferred resources from less to more productive firms and that the magnitude of the overall transfer was quantitatively important.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 76 (2008)
Issue (Month): 2 (December)
Pages: 254-266

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Handle: RePEc:eee:inecon:v:76:y:2008:i:2:p:254-266

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Web page: http://www.elsevier.com/locate/inca/505552

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Keywords: Mergers and acquisitions Trade liberalization Restructuring International trade Canada-United States Free Trade Agreement;

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