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Cross-Border Mergers and National Champions in an Integrating Economy

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  • Jens Südekum

Abstract

We present a simple oligopolistic model with three countries and illustrate the strategic aspects of merger policy. Mergers can be used to appropriate rents on consumptive third markets, even when the trade policy of these countries reacts endogenously. Competition policy inside the bloc of the two producing countries is too permissive towards mergers and acquisitions. A policy of cross-border mergers (European champions) need not imply a conflict between regional and global welfare. In contrast, the promotion of national champions may be in the interest of individual countries, but global welfare is always adversely affected.

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  • Jens Südekum, 2008. "Cross-Border Mergers and National Champions in an Integrating Economy," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 164(3), pages 477-508, September.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200809)164:3_477:cmanci_2.0.tx_2-2
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    References listed on IDEAS

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    1. Keith Chapman, 2003. "Cross-border mergers/acquisitions: a review and research agenda," Journal of Economic Geography, Oxford University Press, vol. 3(3), pages 309-334, July.
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    Cited by:

    1. 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 Département d'économie 09.06, Université de Lausanne, Faculté des HEC, Département d’économie.
    2. Andreas Haufler & Christian Schulte, 2011. "Merger policy and tax competition: the role of foreign firm ownership," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(2), pages 121-145, April.
    3. Santos-Pinto, Luís, 2010. "The impact of firm cost and market size asymmetries on national mergers in a three-country model," International Journal of Industrial Organization, Elsevier, vol. 28(6), pages 682-694, November.
    4. Andreas Haufler & Christian Schulte, 2007. "Merger Policy and Tax Competition," CESifo Working Paper Series 2157, CESifo.
    5. ten Brug, Hans & Rao Sahib, Padma, 2018. "Abandoned deals: the merger and acquisition process in the electricity and gas industry," Energy Policy, Elsevier, vol. 123(C), pages 230-239.
    6. Lommerud, Kjell Erik & Olsen, Trond E. & Straume, Odd Rune, 2006. "Cross border mergers and strategic trade policy with two-part taxation: is international policy coordination beneficial? [Grenzüberschreitende Fusionen und strategische Handelspolitik mit zweiseiti," Discussion Papers, Research Unit: Market Processes and Governance SP II 2006-24, WZB Berlin Social Science Center.

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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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