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Merger policy to promote 'global players'? A simple model

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  • Andreas Haufler
  • Søren Bo Nielsen

Abstract

We use a simple framework where firms in two countries serve their respective domestic markets and a world market to analyse under which conditions cost-reducing mergers will be beneficial for the merging firms, the home country, and the world as a whole. For a national merger, the policies enacted by a national merger authority tend to be overly restrictive from a global efficiency perspective. In contrast, all international mergers that benefit the merging firms will be cleared by either a national or a regional regulator, and this laissez-faire approach is also globally efficient. Finally, we allow for multiple mergers and analyse whether national mergers, international mergers or no mergers will be the equilibrium market structure when the firms' decisions to merge are either taken non-cooperatively or cooperatively. Copyright 2008 , Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 60 (2008)
Issue (Month): 3 (July)
Pages: 517-545

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Handle: RePEc:oup:oxecpp:v:60:y:2008:i:3:p:517-545

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References

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Citations

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Cited by:
  1. Becker, Johannes & Fuest, Clemens, 2011. "Tax competition -- Greenfield investment versus mergers and acquisitions," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 41(5), pages 476-486, September.
  2. Andreas Haufler & Christian Schulte, 2011. "Merger policy and tax competition: the role of foreign firm ownership," International Tax and Public Finance, Springer, Springer, vol. 18(2), pages 121-145, April.
  3. Luís Santos-Pinto, 2009. "The Impact of Firm Size and Market Size Asymmetries on National Mergers in a Three-Country Model," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP), Université de Lausanne, Faculté des HEC, DEEP 09.06, Université de Lausanne, Faculté des HEC, DEEP.
  4. Lommerud, Kjell Erik & Meland, Frode & Straume, Odd Rune, 2008. "Mergers and capital flight in unionised oligopolies: Is there scope for a 'national champion' policy?," Working Papers in Economics, University of Bergen, Department of Economics 02/08, University of Bergen, Department of Economics.
  5. Andreas Haufler & Christian Schulte, 2007. "Merger Policy and Tax Competition," CESifo Working Paper Series, CESifo Group Munich 2157, CESifo Group Munich.
  6. Johannes Becker & Clemens Fuest, 2010. "Taxing Foreign Profits With International Mergers And Acquisitions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(1), pages 171-186, 02.
  7. Kjell Lommerud & Trond Olsen & Odd Straume, 2010. "Company Taxation and Merger Incentives in International Oligopoly: on International Policy Coordination with Strategic Trade," Journal of Industry, Competition and Trade, Springer, Springer, vol. 10(2), pages 161-186, June.
  8. Santos-Pinto, Luís, 2010. "The impact of firm cost and market size asymmetries on national mergers in a three-country model," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 28(6), pages 682-694, November.
  9. Lommerud, Kjell Erik & Olsen, Trond E. & Straume, Odd Rune, 2006. "Cross border mergers and strategic trade policy with two-part taxation: is international policy coordination beneficial?," Discussion Papers, Research Unit: Market Processes and Governance, Social Science Research Center Berlin (WZB) SP II 2006-24, Social Science Research Center Berlin (WZB).
  10. Francesc Trillas, 2008. "Regulatory federalism in network industries," Working Papers, Institut d'Economia de Barcelona (IEB) 2008/8, Institut d'Economia de Barcelona (IEB).
  11. Johannes Becker & Clemens Fuest, 2007. "Corporate Tax Policy and International Mergers and Acquisitions – Is the Tax Exemption System Superior?," CESifo Working Paper Series, CESifo Group Munich 1884, CESifo Group Munich.

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