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Cross-Border Mergers and Acquisitions: On Revealed Comparative Advantage and Merger Waves

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  • Steven Brakman
  • Harry Garretsen
  • Charles van Marrewijk

Abstract

By combining two large data sets (on international trade flows and on mergers and acquisitions – M&As), we are able to test two implications of Neary’s (2003, 2004a) recent theoretical work. Analyzing M&As in a General Oligopolistic Equilibrium (GOLE) model incorporating strategic interaction between firms in a general equilibrium setting, we argue that: (i) M&As follow revealed comparative advantage as measured by the Balassa index, and (ii) M&As come in waves. We find convincing support for both hypotheses, thus showing for the first time that there is an empirical connection between export performance and mergers and acquisitions.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1602.

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Date of creation: 2005
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Handle: RePEc:ces:ceswps:_1602

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Keywords: comparative advantage; cross border mergers and acquisitions; merger waves; general oligopolistic equilibrium model;

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References

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  1. Walter Kuemmerle, 1999. "The Drivers of Foreign Direct Investment into Research and Development: An Empirical Investigation," Journal of International Business Studies, Palgrave Macmillan, vol. 30(1), pages 1-24, March.
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  3. Gugler, Klaus & Mueller, Dennis C. & Yurtoglu, B. Burcin & Zulehner, Christine, 2003. "The effects of mergers: an international comparison," International Journal of Industrial Organization, Elsevier, vol. 21(5), pages 625-653, May.
  4. Cletus C. Coughlin & Eran Segev, 2000. "Location Determinants of New Foreign-Owned Manufacturing Plants," Journal of Regional Science, Wiley Blackwell, Wiley Blackwell, vol. 40(2), pages 323-351.
  5. J Peter Neary, 2002. "Globalisation and Market Structure," Working Papers, School Of Economics, University College Dublin 200220, School Of Economics, University College Dublin.
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  13. Ingmar Bj�rkman & G�nter K Stahl & Eero Vaara, 2007. "Cultural differences and capability transfer in cross-border acquisitions: the mediating roles of capability complementarity, absorptive capacity, and social integration," Journal of International Business Studies, Palgrave Macmillan, vol. 38(4), pages 658-672, July.
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  22. Jeroen Hinloopen & Charles Marrewijk, 2001. "On the empirical distribution of the Balassa index," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 137(1), pages 1-35, March.
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Citations

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Cited by:
  1. Steven Brakman & Harry Garretsen & Charles van Marrewijk, 2006. "Comparative advantage, cross-border mergers and merger waves: International economics meets industrial organization," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 7(1), pages 22-26, 04.
  2. Ray Chaudhuri, A., 2008. "A Dynamic Model of Endogenous Mergers and Trade Liberalization," Discussion Paper, Tilburg University, Center for Economic Research 2008-22, Tilburg University, Center for Economic Research.
  3. Rudy Colacicco, 2013. "Strategic Trade Policy in General Oligopolistic Equilibrium," FIW Working Paper series 126, FIW.
  4. Neary, J Peter, 2006. "Trade Costs and Foreign Direct Investment," CEPR Discussion Papers 5933, C.E.P.R. Discussion Papers.
  5. Amrita Ray Chaudhuri & Hassan Benchekroun, 2012. "Welfare Effect of Mergers and Multilateral Trade Liberalization," Review of International Economics, Wiley Blackwell, vol. 20(1), pages 119-133, 02.
  6. Charles van Marrewijk & Gus Garita, 2008. "Countries of a Feather flock together," Tinbergen Institute Discussion Papers 08-067/2, Tinbergen Institute, revised 19 Sep 2008.
  7. Ray Chaudhuri, A. & Benchekroun, H., 2008. "Welfare Effect of Mergers and Trade Liberalization," Discussion Paper, Tilburg University, Tilburg Law and Economic Center 2008-009, Tilburg University, Tilburg Law and Economic Center.
  8. Steven Brakman & Harry Garretsen & Charles van Marrewijk, 2006. "Cross-Border Mergers & Acquisitions: The Facts as a Guide for International Economics," CESifo Working Paper Series 1823, CESifo Group Munich.

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