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On Merger and Acquisition and Protectionism We develop a dynamic model of merger assuming a monopolistic competitive market with heterogeneous rms. We show the existence of a non-trivial equilibrium in the merger market and the conditions under which mergers lower the industry aggregate price. Most importantly, we show as our main result that merger and acquisition activities are in a sense protectionary, nonetheless they can be welfare improving

Author

Listed:
  • Hamid Beladi

    (University of Texas at San Antonio)

  • Reza Oladi

    (Utah State University)

Abstract

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  • Hamid Beladi & Reza Oladi, 2011. "On Merger and Acquisition and Protectionism We develop a dynamic model of merger assuming a monopolistic competitive market with heterogeneous rms. We show the existence of a non-trivial equilibrium i," Working Papers 0006, College of Business, University of Texas at San Antonio.
  • Handle: RePEc:tsa:wpaper:0022fin
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    File URL: http://interim.business.utsa.edu/wps/eco/0006ECO-414-2011.pdf
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    References listed on IDEAS

    as
    1. Beladi, Hamid & Oladi, Reza, 2011. "An elementary proposition on technical progress and non-traded goods," Journal of Mathematical Economics, Elsevier, vol. 47(1), pages 68-71, January.
    2. Farrell, Joseph & Shapiro, Carl, 1990. "Horizontal Mergers: An Equilibrium Analysis," American Economic Review, American Economic Association, vol. 80(1), pages 107-126, March.
    3. Horn, Henrik & Levinsohn, James, 2001. "Merger Policies and Trade Liberalisation," Economic Journal, Royal Economic Society, vol. 111(470), pages 244-276, April.
    4. J. Peter Neary, 2007. "Cross-Border Mergers as Instruments of Comparative Advantage," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(4), pages 1229-1257.
    5. Stephen W. Salant & Sheldon Switzer & Robert J. Reynolds, 1983. "Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(2), pages 185-199.
    6. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    7. Daughety, Andrew F, 1990. "Beneficial Concentration," American Economic Review, American Economic Association, vol. 80(5), pages 1231-1237, December.
    8. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    9. Dixit, Avinash, 1984. "International Trade Policy for Oligopolistic Industries," Economic Journal, Royal Economic Society, vol. 94(376a), pages 1-16, Supplemen.
    10. Lahiri, Sajal & Ono, Yoshiyasu, 1988. "Helping Minor Firms Reduces Welfare," Economic Journal, Royal Economic Society, vol. 98(393), pages 1199-1202, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Mergers; acquisitions; trade; protection;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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