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Cross-border Merger, Vertical Structure, and Spatial Competition

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  • Beladi, Hamid
  • Chakrabarti, Avik
  • Marjit, Sugata

Abstract

This analysis is a natural follow up of continued efforts to assess the consequences of cross-border mergers in industries with a vertical structure. Absent free trade, in a vertically related industry, the downstream firms will not choose the social optimum under spatial price discrimination when none of the downstream firms produce all the varieties that consumers demand. We show that free trade will induce the downstream firms to gravitate toward the social optimum but an upstream merger across borders, under free trade, will pull the downstream firms away from the social optimum back to their autarkic positions.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 24474.

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Date of creation: 2010
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Handle: RePEc:pra:mprapa:24474

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Keywords: Product-differentiation; Price-discrimination; Spatialcompetition; Firm-location; Cross-border Merger;

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  1. Amador, João & Cabral, Sónia, 2009. "Vertical specialization across the world: A relative measure," The North American Journal of Economics and Finance, Elsevier, vol. 20(3), pages 267-280, December.
  2. Stähler, Frank & Ryan, Michael & Raff, Horst, 2007. "The Choice of Market Entry Mode: Greenfield Investment, M&A and Joint Venture," Economics Working Papers 2007,19, Christian-Albrechts-University of Kiel, Department of Economics.
  3. Haller, Stefanie A., 2009. "The impact of multinational entry on domestic market structure and investment," International Review of Economics & Finance, Elsevier, vol. 18(1), pages 52-62, January.
  4. Beladi, Hamid & Chakrabarti, Avik & Marjit, Sugata, 2009. "Sequential Spatial Competition in Vertically Related industries with Different Product Varieties," MPRA Paper 19278, University Library of Munich, Germany.
  5. Leandro Arozamena & erico Weinschelbaum, 2008. "Simultaneous vs. Sequential Price Competition with Incomplete Information," Department of Economics Working Papers 2008_3, Universidad Torcuato Di Tella.
  6. repec:bla:restud:v:74:y:2007:i:4:p:1229-1257 is not listed on IDEAS
  7. Braid, Ralph M., 2008. "Spatial price discrimination and the locations of firms with different product selections or product varieties," Economics Letters, Elsevier, vol. 98(3), pages 342-347, March.
  8. Klomp, Jeroen, 2010. "Causes of banking crises revisited," The North American Journal of Economics and Finance, Elsevier, vol. 21(1), pages 72-87, March.
  9. Lafontaine, Francine & Slade, Margaret, 2007. "Vertical Integration and Firm Boundaries : The Evidence," The Warwick Economics Research Paper Series (TWERPS) 799, University of Warwick, Department of Economics.
  10. Dasgupta, Partha & Maskin, Eric, 1986. "The Existence of Equilibrium in Discontinuous Economic Games, II: Applications," Review of Economic Studies, Wiley Blackwell, vol. 53(1), pages 27-41, January.
  11. Kurata, Hiroshi & Ohkawa, Takao & Okamura, Makoto, 2009. "Location choice, competition, and welfare in non-tradable service FDI," International Review of Economics & Finance, Elsevier, vol. 18(1), pages 20-25, January.
  12. J. Riley & E. Maskin, 1981. "Optimal Auctions with Risk Averse Buyers," Working papers 311, Massachusetts Institute of Technology (MIT), Department of Economics.
  13. Beladi, Hamid & Chakrabarti, Avik & Marjit, Sugata, 2008. "Vertical mergers and downstream spatial competition with different product varieties," Economics Letters, Elsevier, vol. 101(3), pages 262-264, December.
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