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The Effects of Domestic Mergers on Exports: A Case Study of the 1998 Korean Automobile Industry

Author

Listed:
  • Hiroshi Ohashi

    (Faculty of Economics, The University of Tokyo)

  • Yuta Toyama

    (Department of Economics, The University of Tokyo)

Abstract

This paper examines the economic consequences of a horizontal merger between Korean automakers that took place in 1998, with a particular emphasis on export market behavior. Estimates of structural demand and supply reveal that the merger enhanced production efficiency of the merged party by 6.3 percent. Simulations, based on these estimates, indicate that while the merger increased domestic prices, it also tripled the export volume of the merged party. Moreover, the e ects of the merger are found to di er by auto model according to the model's pre-merger export status. It is shown that efficiency gains from the merger are likely to increase export volumes for models that were already exported prior to the merger, and to o set domestic market power for those that were not exported even after the merger. Finally, the paper compares the actual merger's e ects to those of an alternative counterfactual merger, nding that the actual merger brought greater bene ts to producers and fewer to domestic consumers. --

Suggested Citation

  • Hiroshi Ohashi & Yuta Toyama, 2015. "The Effects of Domestic Mergers on Exports: A Case Study of the 1998 Korean Automobile Industry," CIRJE F-Series CIRJE-F-974, CIRJE, Faculty of Economics, University of Tokyo.
  • Handle: RePEc:tky:fseres:2015cf974
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    Cited by:

    1. Jackie M.L. Chan & Michael Irlacher & Michael Koch, 2022. "Multiproduct Mergers and the Product Mix in Domestic and Foreign Markets," Economics working papers 2022-03, Department of Economics, Johannes Kepler University Linz, Austria.
    2. Nakamura, Masao & Zhang, Anming, 2018. "Foreign direct investment with host country market structures, with empirical application to Japan," Journal of the Japanese and International Economies, Elsevier, vol. 49(C), pages 43-53.
    3. NAKAMURA Tsuyoshi & OHASHI Hiroshi, 2020. "Imports, Exports, and the Impact of Mergers on Domestic Markets: A Case Study from Japan's Copper Tube Industry," Discussion papers 20013, Research Institute of Economy, Trade and Industry (RIETI).

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    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment

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