The Impact of Firm Size and Market Size Asymmetries on National Mergers in a Three-Country Model
AbstractThis paper studies the impact of firm and market size asymmetries on merger decisions. To do that I consider a model where a small and a large country compete in a third (world) market. Each of the two countries has two firms (with potentially different costs) that supply the domestic market and export to the third market. Merger decisions in the two countries are modeled as a simultaneously move game. The paper finds that firms in the large country have more incentives to merge than firms in the small country. In contrast, the government of the large country has more incentives to block a merger than the government of the small country. Thus, the model predicts that conflicts of interest between governments and firms concerning national mergers are more likely in large countries than in small ones.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 17166.
Date of creation: 26 Aug 2009
Date of revision:
International Trade; Merger Policy; Size Asymmetry;
Other versions of this item:
- 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 DÃ©partement d'EconomÃ©trie et d'Economie politique (DEEP) 09.06, Université de Lausanne, Faculté des HEC, DEEP.
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
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