Trade and mergers in the presence of firm heterogeneity
AbstractWe investigate the role of firm heterogeneity in considering profitability and desirability of mergers in the international economy. Analysis shows that higher trade costs make only crossborder mergers profitable whereas larger firm heterogeneity is likely to increase both domestic and cross-border mergers. Furthermore, it is shown that whether or not a merger leads to merger waves depends on the types of firms involved in it. It is also demonstrated that larger firm heterogeneity can reduce the discrepancy between profitability and desirability of mergers when the trade cost is sufficiently low.
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Bibliographic InfoPaper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 08-35.
Length: 45 pages
Date of creation: Nov 2008
Date of revision:
M&As; trade; firm heterogeneity; Cournot competition;
Find related papers by JEL classification:
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-25 (All new papers)
- NEP-BEC-2008-11-25 (Business Economics)
- NEP-COM-2008-11-25 (Industrial Competition)
- NEP-IND-2008-11-25 (Industrial Organization)
- NEP-INT-2008-11-25 (International Trade)
- NEP-MIC-2008-11-25 (Microeconomics)
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- Matsushima Noriaki & Sato Yasuhiro & Yamamoto Kazuhiro, 2013.
"Horizontal Mergers, Firm Heterogeneity, and R&D Investments,"
The B.E. Journal of Economic Analysis & Policy,
De Gruyter, vol. 13(2), pages 959-990, August.
- Noriaki Matsushima & Yasuhiro Sato & Kazuhiro Yamamoto, 2009. "Horizontal mergers, firm heterogeneity, and R&D investments," ISER Discussion Paper 0754, Institute of Social and Economic Research, Osaka University.
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