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Merger Policy to Promote Global Players? A Simple Model

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  • Haufler, Andreas
  • Nielsen, Søren Bo

Abstract

We use a simple framework where firms in two countries serve their respective domestic markets and a world market to analyze 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 derive the properties of the endogenous merger equilibrium.

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Bibliographic Info

Paper provided by University of Munich, Department of Economics in its series Discussion Papers in Economics with number 666.

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Date of creation: Jul 2005
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Handle: RePEc:lmu:muenec:666

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Keywords: merger policy; international trade;

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References

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Citations

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Cited by:
  1. Francesc Trillas, 2008. "Regulatory federalism in network industries," Working Papers 2008/8, Institut d'Economia de Barcelona (IEB).
  2. 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, vol. 28(6), pages 682-694, November.
  3. 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, vol. 10(2), pages 161-186, June.
  4. Haufler, Andreas & Schulte, Christian, 2007. "Merger Policy and Tax Competition," Discussion Papers in Economics 2074, University of Munich, Department of Economics.
  5. 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 SP II 2006-24, Social Science Research Center Berlin (WZB).
  6. Kjell Erik Lommerud & Frode Meland & Odd Rune Straume, 2008. "Mergers and capital flight in unionised oligopolies: Is there scope for a 'national champion' policy?," NIPE Working Papers 10/2008, NIPE - Universidade do Minho.
  7. Haufler, Andreas & Schulte, Christian, 2011. "Merger policy and tax competition: The role of foreign firm ownership," Munich Reprints in Economics 20413, University of Munich, Department of Economics.
  8. 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, vol. 51(1), pages 171-186, 02.
  9. Johannes Becker & Clemens Fuest, 2007. "Corporate Tax Policy and International Mergers and Acquisitions – Is the Tax Exemption System Superior?," CESifo Working Paper Series 1884, CESifo Group Munich.
  10. 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) 09.06, Université de Lausanne, Faculté des HEC, DEEP.
  11. Johannes Becker & Clemens Fuest, 2008. "Tax Competition – Greenfield Investment versus Mergers and Acquisitions," CESifo Working Paper Series 2247, CESifo Group Munich.

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